Question

Which one of the following statements concerning mercantile agent is NOT true ?

• A. Self employed agents will not be classified as mercantile agents.
• B. Agents engaged for a single transaction are unlikely to be classified as mercantile agents.
• C. Agents involved in the provision to by goods will be classified as mercantile agents.
• D. Agents that do not have power to negotiate on this principal's behalf will not be classified as mercantile agent.

Answer 1

Answer: (A)

Self employed agents will not be classified as mercantile agents.

Mercantile agents are the agents appointed by businessmen to represent them in commercial dealings with other persons. These agents are classified into categories based on two criteria: (1) rights (2) functions. The main characteristics of these agents are:

(1) They are usually employed for more than one business transaction.

(2) They have the full authority to represent their principals in the assigned transactions and act as intermediary between businessman and ultimate consumer. Therefore, they have negotiating power on behalf of principal.

A mercantile agent who deals with provision of goods (buying and selling) on behalf of principal is referred to as a commission agent. He buys and sells in his own name but does not bear the market risks, he receives a commission for his job. Agents can be self-employed too. The commission agents who are self-employed are referred to as commercial agents and their contractual relationships are well recognized in different laws.