Agent: Difference between revisions
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{{a|contract|}} | {{a|contract|}} | ||
''For the wonderful world of | ''For the wonderful world of [[MiFID]] categorisation, and for a convoluted answer to the question “who’s client”? see [[Client - COBS Provision]]'' | ||
A source of far more angst than you would expect amongst the professional classes. An | A source of far more angst than you would expect amongst the professional classes. An agent is one fellow who represents ''another'' fellow. | ||
===Don’t shoot the messenger=== | ===Don’t shoot the messenger=== | ||
When it comes to entering a | When it comes to entering a [[contract]], an agent enters legal relations on behalf of {{sex|his}} [[principal]] and, in general terms, tries not to take on any personal responsibility {{sex|himself}}. The contract remains between the principal and the third party. | ||
But you soon encounter a thicket of confusion from which you may never emerge and which you will almost certainly regret ever entering. What if the agent doesn't tell the third party who the [[principal]] is? What if the agent doesn't even let on that she’s an agent? | But you soon encounter a thicket of confusion from which you may never emerge and which you will almost certainly regret ever entering. What if the agent doesn't tell the third party who the [[principal]] is? What if the agent doesn't even let on that she’s an agent? | ||
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The problem is that a contract, by well-trodden legal theory, depends upon the state of mind of two people, whereas where an agency exists, the necessary parts of that consensus can live variously between the minds of ''three''. A may have appointed B, without C knowing. B may have represented to C without A knowing. C and A might not know about each other at all. | The problem is that a contract, by well-trodden legal theory, depends upon the state of mind of two people, whereas where an agency exists, the necessary parts of that consensus can live variously between the minds of ''three''. A may have appointed B, without C knowing. B may have represented to C without A knowing. C and A might not know about each other at all. | ||
In this way it resembles playing | In this way it resembles playing [[cricket]] with a [[runner]]. Anyone who has ever done that will know the boundless possibilities for confusion and acrimony it presents. | ||
===At least ''two''=== | |||
From time to time resourceful structurers might try to overcome an accounting problem, or a booking issue between two desks, by interposing an agency arrangement in the middle of a transaction which, otherwise, has the same entity at either end of it. Won’t work. It won’t work even if the agent is a third party — legally, it just vanishes — and it ''certainly'' won’t work if the agent is the same entity as the principal. ''[[Nemo agens in causa sua]]'', as the [[JC]] likes to say. | |||
===[[Capacity and authority]]=== | ===[[Capacity and authority]]=== | ||
An agent must, of course, be duly [[capacity and authority|authorised]] by the [[principal]], but how will the [[third party]] know this, without the [[principal]] being there to confirm it? You will hear much talk of [[ostensible authority]]. | An agent must, of course, be duly [[capacity and authority|authorised]] by the [[principal]], but how will the [[third party]] know this, without the [[principal]] being there to confirm it? You will hear much talk of [[ostensible authority]]. | ||
An agent has a special relationship with a | An agent has a special relationship with a [[principal]] | ||
===[[Broker dealer]]s=== | ===[[Broker dealer]]s=== | ||
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*Buyer pays True Agent a Commission calculated on the contract between Buyer and Seller. | *Buyer pays True Agent a Commission calculated on the contract between Buyer and Seller. | ||
{{Seealsoagent}} | {{Seealsoagent}} | ||
* | *[[executing broker]] | ||
{{ref}} | {{ref}} | ||
{{c|brokerage}} | {{c|brokerage}} | ||
Latest revision as of 15:40, 15 October 2024
For the wonderful world of MiFID categorisation, and for a convoluted answer to the question “who’s client”? see Client - COBS Provision
A source of far more angst than you would expect amongst the professional classes. An agent is one fellow who represents another fellow.
Don’t shoot the messenger
When it comes to entering a contract, an agent enters legal relations on behalf of his principal and, in general terms, tries not to take on any personal responsibility himself. The contract remains between the principal and the third party.
But you soon encounter a thicket of confusion from which you may never emerge and which you will almost certainly regret ever entering. What if the agent doesn't tell the third party who the principal is? What if the agent doesn't even let on that she’s an agent?
It takes three to tango
The problem is that a contract, by well-trodden legal theory, depends upon the state of mind of two people, whereas where an agency exists, the necessary parts of that consensus can live variously between the minds of three. A may have appointed B, without C knowing. B may have represented to C without A knowing. C and A might not know about each other at all.
In this way it resembles playing cricket with a runner. Anyone who has ever done that will know the boundless possibilities for confusion and acrimony it presents.
At least two
From time to time resourceful structurers might try to overcome an accounting problem, or a booking issue between two desks, by interposing an agency arrangement in the middle of a transaction which, otherwise, has the same entity at either end of it. Won’t work. It won’t work even if the agent is a third party — legally, it just vanishes — and it certainly won’t work if the agent is the same entity as the principal. Nemo agens in causa sua, as the JC likes to say.
Capacity and authority
An agent must, of course, be duly authorised by the principal, but how will the third party know this, without the principal being there to confirm it? You will hear much talk of ostensible authority.
An agent has a special relationship with a principal
Broker dealers
An Intermediary acts as True Agent if, acting on Buyer’s behalf, it agrees the purchase of an Asset from Seller by Buyer.
- True Agent acts at all times on Buyer’s behalf and never in its own capacity.
- A True Agent will not record the Asset in its own trading books at any time.
- There is never any contract with respect to the Asset either
- between True Agent and Seller, or
- between True Agent and Buyer.
- Buyer pays True Agent a Commission calculated on the contract between Buyer and Seller.
See also
- Agent
- Principal
- Riskless principal
- Undisclosed agent (a.k.a. knave)
- Undisclosed principal
- executing broker