Distinguish between Broker and commission agent. (2024)

Broker vs. Commission Agent

Broker:

1. Role: A broker acts as an intermediary between buyers and sellers, facilitating transactions but does not take ownership of the goods.
2. Compensation: Brokers are compensated through a brokerage fee or commission, which is typically a percentage of the transaction value.
3. Ownership: Brokers do not take ownership of the goods or products being traded. They simply connect buyers and sellers.
4. Responsibility: Brokers are responsible for finding suitable buyers or sellers for their clients and negotiating the terms of the transaction on their behalf.
5. Legal Status: Brokers may be individuals or firms that are licensed or registered to operate in a specific market or industry.

Commission Agent:

1. Role: A commission agent acts as a representative of the seller and takes possession of the goods on behalf of the seller.
2. Compensation: Commission agents are compensated through a commission, which is typically a percentage of the value of the goods sold.
3. Ownership: Commission agents take possession of the goods but do not take ownership. They sell the goods on behalf of the seller.
4. Responsibility: Commission agents are responsible for selling the goods at the best possible price and under the terms agreed upon with the seller.
5. Legal Status: Commission agents may operate independently or be part of a larger agency. They are typically regulated by laws and regulations governing the sale of goods.

In summary, while both brokers and commission agents act as intermediaries in transactions, the key difference lies in their roles and responsibilities. Brokers facilitate transactions without taking ownership of the goods, while commission agents represent the seller and take possession of the goods on their behalf.