Contract of Commission Agency: Key Characteristics and Definitions

Lecture 1 Contract of Commission Agency Introduction : - Many facts now prevailing in global trading which render the performance of commercial transactions through commission agents less demanding than before. With the development of communications and modes of transportation, international producers of commodities and services became well known and easy to be approached without the need for a commission agent whose repute and activities are locally limited. Instead, they became more dependable on commercial representatives to circulate their products and services. Nevertheless, the contract of commission agency remains an important component in many trades like insurance, reinsurance, air and marine transportation. In addition, the commission agency has a special role to play in Bahrain

Lecture 1 Contract of Commission Agency Q : Define commission agency? According to the commercial legislator, the commission agency has been defined as: A contract whereby the agent undertakes to perform in his own name a legal disposition for the account of the principal in return for a remuneration

Lecture 1 Contract of Commission Agency Though the above definition comes into different drafts, it basically reveals that the commission agent is engaged in two contracts, the first is the contract concluded between the commission agent and the principal which is the commission agency contract, whereas another contract exists between the commission agent and a third party, whereby the commission agent contracts in his own name with that third party for the account of another party who is the principal in return for a fee or a commission.

Lecture 1 Contract of Commission Agency The commission agency contract is distinguished from other similar contracts by the following characteristics: 1 - Commerciality of the Contract: In addition rendering the commission agency as commercial once it has been performed professionally, the commission agent has been considered a trader as the legislator required him to exert the care expected from the ordinary trader when performing the commission agency. Therefore, by considering the commission agency a commercial transaction when performed in a professional manner, and considering the commission as commercial business performed by a trader, then the commerciality of the contract is established. 2 - A commutative Contract: The contract of commission agency is, by definition a contract concluded in return for a commission, which is an integral part of the contract. In addition, this contract is a contract of commercial agency whereby the agent entitled for a profit or a commission. Q : Explain the Characteristics of commission agency contract ?

3- Incomplete Deputization : Basically, the agency is a contract whereby the principal authorizes another person on his behalf to perform a legal disposition, hence the agent is performing the agency for the principal, and appearing for the third parties as an agent, disclosing his entity as a deputy for the principal. commission agent, on the other hand, is contracting in his own name for the account of the principal in return for a commission, which subsequently means that the principal remains disguised and unknown to the third parties, unless the circumstances surrounding the contract otherwise stipulate, whereas the commission agent shoulders the contractual obligations towards the third parties, almost at the same time his obligations with his principal are governed by the commission agency contract. The