Article II: On Sale Through Brokers

525. Sale, or purchase, through brokers is that which is not made immediately by him to whom the thing to be sold pertains, or who intends to acquire it for himself, but from his mandate or commission is made by others, who are called brokers, that is, intermediary negotiators, whether they are legally constituted or simple mandataries.

Therefore brokers or factors are all those who undertake for another the care of buying or selling a thing; or those to whom something is committed to be sold or bought in the name of the one committing it, and who buy or sell something in the name of another. Whence they are as it were mandataries of those in whose name they act, and therefore they have the obligations of mandataries to be fulfilled.¹ They are called by various names: courtiers, commissionnaires, entremetteurs, commis voyageurs, representants de commerce; - makelaars, zaakvoerders, bemiddelaars, reizend-bedienden, etc.

¹ Concerning these, cf. Civil Code, a. 1984 sq., and Belgian Commercial Code I, tit. V and VII.

526. Principles concerning the obligations and rights of brokers. - I. Brokers must faithfully carry on the business committed to them, with that diligence which they are wont to employ in their own affairs of the same kind.

For to this end they are selected and employed and receive a stipend, that they may faithfully conduct the affairs of the mandator, and that purchase or sale may be made in the manner more profitable to him. Wherefore they are bound to repair damages inflicted on the mandator on account of their culpable negligence in conducting the business.

II. Brokers as such, in themselves and regularly, have a right only to the stipend of their labor (unless they wish to act gratuitously), but not to a part of the benefit. For they do not act in their own name, but in the name of the owner from whom they receive salary, and therefore whatever they gain by negotiating they acquire not for themselves but for the owner. Therefore every gain which they receive in conducting the business they must hand over to the mandator, and they can retain nothing for themselves, even if they buy below or sell above the established price.

Yet by accident they can retain part of the gain for themselves: a) if a special agreement so bears, by which, for example, five percent is conceded to them; b) if by extraordinary diligence to which they were not bound by force of office they sold more dearly or bought more cheaply than had been predetermined by the owner, if this is certain: for this is not presumed, and in this matter one must especially beware of illusions easily arising; c) if the owner explicitly consents by declaring that he demands nothing beyond the established price, or if he consents implicitly, as if he knows that this is done regularly and is silent, provided he is not silent from fear.

III. Brokers in themselves can retain gifts for themselves which are conceded to them by merchants in mere favor of themselves. For these are conceded by merchants so that they may frequent their shops rather than those of others, and they would not be attributed to the owners themselves buying or selling; this also holds concerning a diminution of price if it is certain that it is made in favor of the brokers, for example, from an existing custom. Thus a music teacher, asked by another to buy an instrument of the value of 5,000 francs, which nevertheless he buys at the remitted price of 4,500 francs (the artisan's price), can retain the gain for himself; so also tailors buying cloth for a client can retain the diminution of price gratuitously given to them by the seller, from the price established for them, "the tailor's price."

Yet brokers could not retain these things for themselves if merchants therefore sell at a dearer price or cheaper merchandise, and thus the owner is compelled to pay more; - just as neither those things which would be given to them so that they conduct the owner's business badly or less vigilantly.

527. Applications. - 1. It is asked whether a broker can buy for himself a thing to be sold at an established price, and afterward sell the same thing as his own at a greater price?

Resp. a) Regularly this is not licit, as being against the intention of the mandating owner, who takes the broker precisely so that he may conduct his affairs in the best way that can be done; - b) sometimes it is specially prohibited by civil law under penalty of nullity (a. 1596), namely to tutors concerning the goods of wards, to mandataries concerning goods which they must sell from mandate, to administrators of common goods or of a public institute, to public officials by whose ministry national goods are sold; - c) apart from those things, in a determined case, if after diligence has been applied the broker could not find a buyer who would offer more, he can acquire the thing for himself, provided he does this not fictitiously but truly, so that he takes the risk of the thing upon himself, and, having suffered detriment, does not return the thing to the owner, but whatever happens pays the established price to the owner.

2. What must be judged concerning the practice of servants who, buying for the master, receive little gifts from merchants, or retain for themselves the gain from diminution of price?

Resp. The question must be solved from the same principles, and indeed:

1. The matter is dangerous, for a) merchants act unjustly (and the servants cooperating with them) who, in order to attract servants, unjustly subtract from masters what they concede to servants; b) servants act unjustly (and merchants cooperating with them) who indicate a greater price to the master, although not beyond the highest, with the merchant conniving, and retain something for themselves.

2. Nevertheless, if it is morally certain that something is conceded by merchants, without detriment being inflicted on the masters thereby, in mere favor of the servants, these certainly can retain it for themselves. This a) is easily admitted concerning little gifts, unless they were given so that the servant would conduct the master's affairs negligently; b) concerning diminution of price it can be admitted only with difficulty: for since servants receive a salary and do not buy many things as brokers do, such a diminution is not considered made with regard to them and in itself accrues to the master; and it is greatly to be feared lest merchants write down a greater price and impose on the masters, so that from this, under the pretext of diminishing the price, they pay something to the servants. c) If nevertheless it is clear that, without injustice toward the masters, this is conceded to the servants, they can accept; or if somewhere there is a universal custom, or if the masters know the practice and consent; not however if they undergo it unwillingly.