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

A cocoa merchant in Akure entrusts a consignment of cocoa beans to an agent named Tola. Tola takes physical possession of the cocoa beans, sells them in his own name, and holds the authority to receive payment directly from buyers. However, Tola does not guarantee the solvency of the buyers or assume liability if a buyer defaults. Based on commercial law, which type of agent is Tola?

  1. FactorAnswer
  2. B
    Broker
  3. C
    Del credere agent
  4. D
    Universal agent

Answer

Factor
A factor is a mercantile agent who is entrusted with the physical possession of goods with authority to sell them in their own name and receive payment. Because Tola holds possession of the cocoa beans, sells them under his own name, and collects funds without guaranteeing buyer payment, he fits the legal definition of a factor.

Step-by-Step Solution

1
Analyze the rights and authority granted to the agent in the scenario.
The agent has physical possession of the goods, sells in his own name, and collects payments.
Physical possession and selling under the agent's name are defining attributes of specific mercantile agent categories.
2
Evaluate the financial risk/guarantee element.
The agent does not guarantee buyer payment or solvency.
This rules out a del credere agent, who undertakes indemnity against default for extra commission.
3
Match the agent's characteristics with legal classifications.
An agent with possession selling in their own name without guaranteeing solvency is a factor.
A broker lacks possession, a del credere agent guarantees payment, and a universal agent has unrestricted general power.

Key Concept

Classification of Mercantile Agents under Commercial Law
Estimated Time:1m 0s
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Topics

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

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