Middlemen and Their Different Kinds

1st Year POC - Principles of Commerce Notes

Middlemen and Their Different Kinds



karachiboardnotes.blogspot.com



INTRODUCTION



“ A business concern that is specialized in rendering services
immediately involved in the purchase or sale of the goods in the process
of distribution is known as middle man.”



There term middle man included all those who operates between producer
and consumers. They function in buying and selling if the commodity. The
wholesalers and retailers are middleman dealing in the ordinary
function of buying and selling. There are other such as brokers.
Commission agents, dealers and merchants who assist the buyers ans
sellers in the market.

KINDS OF MIDDLEMEN



Some of the middle men are explained as follow





1. BROKER:



A broker is an agent involved to buying and selling on behalf of
principal for a commission. He does not hold any stock nor deals with
his own name. his function is only to negotiate and make contract of
sales and purchases on behalf of others. He is paid for his labour
called as brokerage. There are different classes of brokers. They are
produce broker, stock broker, insurance broker and ship broker.





2. FACTOR:



He is an agent whose function is to receive goods from his principal for
sale in commission. He can sell goods in his own name, pledge goods in
his own possession receive payments and gives receipts. He is liable on
contract of sale he enters into on behalf of his principal. A factor is
also called a consignment broker.





3. COMMISSION AGENT:



He acts on behalf of foreign importer. His function is to buy goods on
behalf of client abroad and to dispatch them in accordance with the
instructions. He receives a commission for his service.





4. UNDERWRITER:



They enter into agreement with promoters of newly started company which
have not been taken up by the public. For this guarantee they are paid
commission known as underwritten commission.





5.DEL CREDERE AGENT:



He is an agent who in consideration for extra remuneration called del
credere commission. Guarantees to his principal that the third person
with whom he enters into contracts shall perform their obligation. Thus
such an agent guarantees to his principal that he will only sell to
person who will pay for what they buy and if the buyer does not pay, he
will pay.



6. TRAVELLING AGENT:



Sometimes wholesalers appoints number of agents who goes from place to
place , show catalogues, price lists etc. to retailers , book orders and
forward them to their principals who executes them. They receive their
commission in return of their service.





7. SELLING AGENT:



Sometimes wholesalers and manufactures appoints certain shop-keepers in
different parts of the country as their selling agents. These agents
receive commission on all sales in addition to the expenses which they
have incurred on behalf of principal.





8. AUCTIONEERS:



An auctioneer is an agent who sells goods by auction ie to the highest
bidder in public competition. He has no authority to hold the goods sold
and can deliver the goods only on receipt of price. He is the agent of
the vender.





9. FORWARDING AGENT: This is the type of agent who is engaged in forwarding the goods to there destination on certain charges.





10. CLEARING AGENT:



This agent is involved in clearing the imports on behalf of their
principal. The duties include taking the delivery of the goods from the
ship and attending to custom formalities for certain commission.





DISTINCTION BETWEEN FACTOR AND BROKER



Factor



1. He has the possession of goods or documents which entitle him to the possession.



2. He carries out the trade with his name.



3. He is himself liable in respect of the contract of sale.



4. He receives payment from the customer and gives him discharge.



5. He has lion in respect on goods in respect of his commission. Broker





Broker



1. He has no possession of the goods which he sells.



2. He brings together both the parties to a transaction. The sale is made in the name of the principal.



3. He is not liable in respect of such contracts.



4. He does not receive payment of the value of the goods from the customer and cannot give his discharge.



5. He has lien on goods.