commission(redirected from Brokerage Allowances)
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in civil law, a contract according to which one party (the commission agent) is obligated by the commission of another party (the principal) to conclude a transaction (or several transactions) with a third person in his own name and for compensation but in the interests of and at the expense of the principal. Commissions are most common in contracts of selling and buying. Acting in his own name, the commission agent must execute all obligations and realize all rights for the transactions concluded and then turn over to the principal all property received and also all rights in relation to the third person. The agent must be guided by the principal’s instructions; he has the right to deviate from them only in cases where this is called for by the principal’s interests and where the agent was unable to ask the principal in advance or did not receive an answer from him in time. The commission agent is not responsible to the principal for the third party’s performance in the transaction once it is concluded, except in cases where he assumes a special guaranty (del credere).
The commission agent has the right to receive compensation from the principal for performance of the commission. The size of the compensation is determined by agreement of the parties if no other amount has been established by law. In addition, the principal must reimburse the agent for all expenses incurred by him. The agent may take all these sums from the money received by him on behalf of the principal.
In the USSR the commission contract is controlled by the Basic Principles of Civil Law of the USSR and the Union Republics of 1961 and by the civil codes of the Union republics. According to Soviet law, socialist organizations that enjoy the rights of a legal person may act as commission agents if their charters envision such functions. For example, consignment stores carry out the commissions of citizens, based on commission contracts, to sell consumer goods and motor vehicles; consumer cooperative organizations sell farm products on commission from kolkhozes; marketing organizations carry out commissions from enterprises to sell surplus and unused materials and equipment; and foreign trade organizations are commissioned by socialist organizations to purchase goods abroad to be imported.