del credere agent meaning of del credere agent in Longman Dictionary of Contemporary English
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Such an arrangement often may, as it did in the Masonite case, involve the principal’s fixing the price at which the agent sells the goods that the principal supplies it. Moreover, although the contract may be useful “in allocating risks between the parties and determining their rights inter se, its terms do not necessarily control when the rights of others intervene,” such as those of creditors or the public. Because the arrangement had the purpose of fixing competitors’ prices it was held illegal under Sherman Act § 1.
There is insurance specifically designed for SMEs, to insure against non-payment of goods and services sold on credit. If non-payment can be established, the company will be compensated according to the terms of the insurance policy. However, it is possible to protect oneself from del credere risk while still giving payment terms to customers. Del credere risk threatens a company’s financial health because it disrupts cash flow, even more so if a significant portion of its sales are exposed to del credere risk. In finance and in law, the del credere obligation makes an intermediary jointly and severally liable for his client’s debts, as it relates to a particular transaction. This obligation generally results from a signed contract, and it encourages the intermediary to wait until his client provides sufficient guarantees of solvency before finalizing the sale.
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The Supreme Court held that, although the parties’ agency agreement could be assumed genuine rather than sham, id. at 277, use of del credere agency does not necessarily insulate the firms from antitrust liability. Del credere commission is related to credit sales. It is a type of commission which a consignor offers to the consignee who guarantees the collection of payment from credit customers. It is different from the consignee’s ordinary commission and works like a credit insurance to consignor in the event a customer becomes insolvent or fails to make payment due to some other reason.
Definitions & Translations
The nature of a del credere agency puts the agent in a situation where they have responsibilities connected to both the buyer and seller of the product or service in the transaction. When they sell the service or product, they also guarantee del credere meaning the buyer will pay for it appropriately. Demurrage Charges payable by a shipper or consignee to a carrier for failing to unload, release, or otherwise return to service the carrier’s equipment within a prescribed period of time.
Rep. 112; Paley on Agency, 39. However, the del credere agents will only become liable to pay the amount owed to the principal in the event of a default, where the buyer fails to pay the seller . The amount owed to the principal is limited to the sum of the outstanding payment.
Auction houses are the most common example of a del credere agency. Define Dictionary Meaning is an easy to use platform where anyone can create and share short informal definition of any word. Loading Summary of Loading A risk premium in addition to interest charges and acceptance fees deducted by a bank or discount house from the face value of a bill of exchange presented for discounting.
ii) Factor agent.
In consignment account, del credere commission appears on the debit side along with the ordinary commission allowed to the consignee. A del credere might choose to only work with buyers with a certain credit rating or level of solvency to better ensure they will consistently pay their bills. From the agent’s point of view, for undertaking the additional risk, he will get the extra payment from the seller over and above the regular payment, which he could have gotten in case the additional risk would not have been undertaken. This extra payment is generally in the form of the additional sales commission, which is known as the del credere commission.
- If the buyer is unable to pay the bill after the transaction is completed, a del credere agent may become liable for that amount.
- If the winning bidder cannot, or chooses not to pay the agreed-upon price, the auctioneer is within their legal rights to pursue further action to collect.
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- A transferable letter of credit is one that grants a primary beneficiary the right to transfer some or all of the credit to a secondary beneficiary.
- The agent would be liable to the extent of that amount to the seller.
No entry – when del credere commission is allowed to the consignee, the consignor has nothing to do with bad debts. The computation of del credere commission is similar to the computation of ordinary commission. However, the consignor and consignee may sign a separate agreement regarding the calculation and payment of del credere commission. Due to the increased risk taken on by a del credere agency for bad debt, the agency often charges an additional commission, known as the ‘Del Credere Commission’. A Del Credere Agent not only establishes a privity of contract between the principal and the third party but also guarantees to the principal the due performance of the contract by the third party.
Draw up necessary ledger accounts in the books of Kim and Harry assuming the Harry is given a 5% del credere commission . Other things remaining the same. A credit customer who purchased goods for $2,500 did not make payment and the debt proved bad.
A del crede commission is a commission which is paid as direct commission instead of paying through someone else. Del Crede commission is that of a surety who is liable to the principal should the purchaser make default. The agent is liable, however, only when the third party fails to carry out their contract, e.g., by insolvency.
International Legal Research
The holding in Masonite thus seems to overrule partially the Supreme Court’s earlier holding in United States v. General Electric Co., 272 U.S. 476 . A del credere agent, in English law, is one who, selling goods for his principal on credit, undertakes for an additional commission to sell only to persons who are absolutely solvent. His position is thus that of a surety who is liable to his principal should the vendee make default.
The agent is not liable to the principal if the third party refuses to carry out the contract, for example if the buyer refuses to take delivery. In the case of United States v. Masonite Corp., 316 U.S. 265 , the U.S. Supreme Court evaluated the antitrust status of use of a del credere agency business structure.
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Examples of Del Credere Agent in a sentence
The amount of free time allowed to load, unload, or return the equipment and the rate of charges are specified in […]… Inducement In maritime shipping, the tender by a shipper to a carrier of a sufficient amount of cargo so as to warrant a vessel calling at a port not ordinarily scheduled during the voyage……. Intermediate Consignee A person named in a bill of lading or other shipping paper as authorized to receive cargo for the purpose of effecting delivery to the ultimate consignee……. Cargo Summary of Cargo Merchandise in the process of being transported; not to be confused with freight, which, in maritime usage, is the sum earned by a carrier for transporting goods. General cargo consists of various commodities comprising the property of many shippers or consignees; special […]…
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