(a) What is an agency? (b) Explain the features of the following agents: (i) Factor (ii) Broker (iii) Del-credere agent (iv) Auctioneer.

(a) Meaning of an agency

An agency is a relationship in which one person, called the agent, is employed and authorised to act on behalf of another person, called the principal, in dealings with third parties, so as to create or affect legal relations between the principal and those third parties.

(b) Features of the following agents

(i) Factor

A factor is a mercantile agent who is given possession of his principal's goods for the purpose of sale. He sells the goods in his own name, is paid a commission, and may have a lien on the goods for money owed to him. He can also give credit and receive payment on behalf of the principal.

(ii) Broker

A broker is a mercantile agent employed to buy and sell goods for a commission (brokerage), but who is never given possession of the goods. He merely brings buyers and sellers together, makes contracts in the name of his principal, and does not sell in his own name.

(iii) Del-credere agent

A del-credere agent is an agent who, in return for an extra commission (del-credere commission), guarantees to his principal that the third parties (buyers) to whom he sells goods on credit will pay. If any buyer defaults, the del-credere agent bears the loss and pays the principal himself.

(iv) Auctioneer

An auctioneer is an agent employed to sell goods by public auction to the highest bidder. He is given possession of the goods, sells in the open to the public, and earns a commission. The sale is complete on the fall of his hammer, and he may sue for the price in his own name.