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Question

Difficulty: MediumLaw of Agency: Creation, Authority, and Types of Agents

Which of the following correctly pairs each category of commercial agent with its primary legal function or scope of authority?

  • Del credere agentGuarantees the solvency of third-party credit buyers in exchange for an extra commission
  • BrokerBrings buyer and seller together without taking physical possession of the goods
  • FactorHolds physical possession of goods entrusted for sale and can sell them in their own name
  • Universal agentExercises unlimited legal authority to execute all lawful transactions on behalf of the principal

Answer

Del credere agent matches with guaranteeing third-party credit payment; Broker matches with bringing buyer and seller together without possession; Factor matches with holding physical possession of goods to sell in their own name; Universal agent matches with exercising unlimited legal authority for all transactions.
Each commercial agent is accurately matched according to standard principles of agency law: a del credere agent guarantees buyer solvency for additional payment; a broker connects contracting parties without holding goods; a factor holds custody of goods for sale in their own name; and a universal agent possesses broad, unlimited legal powers on behalf of the principal.

Step-by-Step Solution

1
Identify the distinguishing financial guarantee function of a del credere agent.
Del credere agent matches with guaranteeing buyer solvency in credit transactions for extra commission.
The del credere commission specifically shifts the risk of buyer default from the principal to the agent.
2
Distinguish a broker from a factor based on possession of goods and authority to contract.
Broker matches with bringing parties together without possession; Factor matches with holding physical possession of goods and selling in their own name.
Factors maintain physical custody of merchandise, whereas brokers merely negotiate transactions.
3
Determine the legal boundary of a universal agent's authority.
Universal agent matches with exercising unlimited authority for all lawful transactions.
Universal agency grants complete legal representation without restrictions on scope.

Key Concept

Types of Commercial Agents and Scope of Legal Authority
Estimated Time:1m 0s
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Topics

Law of Agency: Creation, Authority, and Types of Agents

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