FACTOR.
The obligations of the principal to the agent are : to pay the agent's remuneration, or, as it is often called, commission, the amount of which may be fixed by contract or usage ; to repay all advances made by the agent in the regular course of his employ ment ; to honour the obligations lawfully undertaken for him ; and to indemnify the agent against all liabilities incurred by him in the proper execution of his mandate. The agent is bound to exercise proper skill and use the proper means for carrying out the functions which he undertakes. He must devote to the in terests of his principal such care and attention as a man of ordi nary prudence does on his own. He must observe the strictest good faith ; and must not enter into transactions in which his interests are in conflict with the interests of his principal. Thus, when he is employed to buy, he must not be the seller; when he is em ployed to sell, he must not be the buyer. A mercantile agent who guarantees the performance by persons with whom he deals of the obligations contracted by them is said to hold a del credere commission.
In the United States courts have often been somewhat more liberal in interpreting an agent's powers than in England, a fact probably attributable to the absence on the part of third parties dealing with agents, of the degree of caution characteristic of an older business community. On the other hand, statutes in some
American states forbid certain types of agents, notably real es tate brokers, from recovering their commissions at law unless their contract of employment was written and signed. It should be noted further that modern American merchandizing practice works out into many situations deemed by business men "agen cies," which may however be dealt with by the law as "sales"; a situation which makes reliance on any general statements of law quite unsafe. Finally, especially in the United States, much of the law as to a master's responsibility for the acts of his servant (see MASTER AND SERVANT) has been carried over to make a principal responsible for wrongs committed by his agent in the course of his employment.
See also AUCTIONS AND AUCTIONEERS ; BROKER ; FACTOR ; GUARANTEE, etc. ; also Smith's Mercantile Law (12th ed., 1924) ; Bowstead, On Agency (7th ed., 1924). Tiffany, Agency (2nd ed. by Powell) ; Mechem, Principles of Agency; Klaus, 28 Columbia L. Rev. 312, 441.