Legal Definitions - del credere agent

Definition: A del credere agent is an agent who guarantees the solvency of the third party with whom the agent makes a contract for the principal. This agent receives possession of the principal's goods for purposes of sale and guarantees that anyone to whom the agent sells the goods on credit will pay promptly for them. For this guaranty, the agent receives a higher commission for sales. The promise of such an agent is almost universally held not to be within the statute of frauds.

Example: A company hires a del credere agent to sell their products to retailers. The agent guarantees that the retailers will pay for the products on time, even if they sell them on credit to their customers. If a retailer fails to pay, the del credere agent is responsible for the payment. In return for this guarantee, the agent receives a higher commission for sales.

Explanation: The del credere agent acts as a guarantor for the principal, ensuring that the third party will fulfill their obligations. This type of agent is commonly used in the sale of goods on credit, where there is a risk of non-payment. The del credere agent takes on this risk in exchange for a higher commission. This arrangement benefits both the principal and the agent, as it allows the principal to sell their products on credit without assuming the risk of non-payment, and it allows the agent to earn a higher commission for taking on this risk.