See also:

• BROKER (according to the New English Dictionary, from Lat. brocca, spit, spike, broccare, to broach "—another Eng. form of the same word; hence O. Fr. vendre d broche, to retail, e.g. wine, from the tap, and thus the general sense of dealing; see also for

BROKER (according to the New See also:

• ENGLISH

English See also:

• DICTIONARY

Dictionary, from See also:

• LAT

Lat. brocca, See also:

• SPIT

spit, spike, broccare, to See also:

• BROACH (Fr. broche, a pointed instrument, Med. Lat. brocca, cf. the Latin adjective brochus or broccus, projecting, used of teeth)
• BROACH, or BHARUCH

broach "—another Eng. See also:

• FORM (Lat. forma)

form of the same word; hence O. Fr. vendre d broche, to See also:

• RETAIL

retail, e.g. See also:

• WINE (Lat. vinum, Gr. oivos)

wine, from the tap, and thus the See also:

• GENERAL
• GENERAL (Lat. generalis, of or relating to a genus, kind or class)

general sense of dealing; see also for  a discussion of the See also:

• ETYMOLOGY (Gr. grvµos, true, and X6yos, "account)

etymology and See also:

• EARLY
• EARLY, JUBAL ANDERSON (1816-1894)

early See also:

• HISTORY

history of the use of the word, J . R . Dos Passos, See also:

• LAW
• LAW (0. Eng. lagu, M. Eng. lawe; from an old Teutonic root lag, " lie," what lies fixed or evenly; cf. Lat. lex, Fr. loi)
• LAW, JOHN (1671—1729)
• LAW, WILLIAM (1686-1761)

Law of Stockbrokers, See also:

• CHAP

chap. i., New See also:

• YORK
• YORK (HOUSE OF)
• YORK, EDMUND OF LANGLEY, DUKE OF (1341-1402)
• YORK, EDWARD
• YORK, FREDERICK AUGUSTUS, DUKE OF (1763-1827)
• YORK, RICHARD, DUKE

York, 1905) . In the See also:

• PRIMARY

primary sense of the word, a See also:

• BROKER (according to the New English Dictionary, from Lat. brocca, spit, spike, broccare, to broach "—another Eng. form of the same word; hence O. Fr. vendre d broche, to retail, e.g. wine, from the tap, and thus the general sense of dealing; see also for

broker is a See also:

• MERCANTILE (or COMMERCIAL) AGENCIES

mercantile See also:

• AGENT (from Lat. agere, to act)

agent, of the class known as See also:

• GENERAL
• GENERAL (Lat. generalis, of or relating to a genus, kind or class)

general agents, whose See also:

• OFFICE (from Lat. officium, " duty," " service," a shortened form of opifacium, from facere, " to do," and either the stem of opes, " wealth," " aid," or opus, " work ")

office is to bring together intending buyers and sellers and make a See also:

• CONTRACT
• CONTRACT (Lat. contract us, from contrahere, to draw together, to bind)

contract between them, for a remuneration called brokerage or See also:

• COMMISSION (from Lat. commissio, committere)

commission; e.g. See also:

• COTTON
• COTTON (Fr. coton; from Arab. qutun)
• COTTON, CHARLES (163o–1687)
• COTTON, GEORGE EDWARD LYNCH (1813–1866)
• COTTON, JOHN (1585–1652)
• COTTON, SIR ROBERT BRUCE

cotton brokers, See also:

• WOOL, WORSTED AND WOOLLEN MANUFACTURES

wool brokers or produce brokers . Originally the only contracts negotiated by brokers were for the See also:

• SALE
• SALE, GEORGE (c. 1697-1736)
• SALE, SIR ROBERT HENRY (1782—1845)

sale or See also:

• PURCHASE

purchase of commodities; but the word in its See also:

• PRESENT

present use includes other classes of mercantile agents, such as stockbrokers, See also:

• INSURANCE

insurance-brokers, See also:

• SHIP

ship-brokers or See also:

• BILL

bill-brokers . Pawnbrokers are not brokers in any proper sense of the word; they See also:

• DEAL

deal as principals and do not See also:

• ACT (Lat. actus, actum)

act as agents . In discussing the See also:

• CHIEF (from Fr. chef, head, Lat. caput)

chief questions of See also:

• MODERN

modern legal See also:

• INTEREST

interest in connexion with brokers, we shall deal with them, firstly, in the See also:

• ORIGINAL

original sense of agents for the purchase and sale of goods . Relations between Broker and See also:

• PRINCIPAL

Principal.—A broker has not, like a See also:

• FACTOR (from Lat. facere, to make or do)

factor, See also:

• POSSESSION
• POSSESSION (Lat. possessio, possidere, to possess)

possession of his principal's goods, and, unless expressly authorized, cannot buy or sell in his own name; his business is to bring into privity of contract his principal and the third party . When the contract is made, ordinarily he drops out altogether . Brokers very frequently act as factors also, but, when they do so, their rights and duties as factors must be distinguished from their rights and duties as brokers . It is a broker's See also:

• DUTY (from " due," that which is owing, O. Fr. deu, dil, past participle of devoir; Lat. debere, debitum; cf. " debt ")

duty to carry out his principal's instructions with See also:

• DILIGENCE

diligence, skill and perfect See also:

• GOOD, JOHN MASON (1764-1827)

good faith . He must see that the terms of the bargain See also:

• ACCORD (from Fr. accorder, to agree)

accord with his principal's orders from a commercial point of view, e.g. as to quality, quantity and See also:

• PRICE
• PRICE, BARTHOLOMEW (1818–1898)
• PRICE, BONAMY (1807-1888)
• PRICE, RICHARD (1723-1791)

price; he must ensure that the contract of sale effected by him be legally enforceable by his principal against the third party; and he must not accept any commission from the third party, or put himself in any position in which his own interest may become opposed to his principal's .

As soon as he has made the contract which he was employed to make, in most respects his duty to, and his authority from, his principal alike cease; and consequently the law of brokers relates principally to the formation of contracts by them . The most important formality in See also:

• ENGLISH

English law, in making contracts for the sale of goods, with which a broker must comply, in See also:

• ORDER
• ORDER (through Fr. ordre, for earlier ordene, from Lat. ordo, ordinis, rank, service, arrangement; the ultimate source is generally taken to be the root seen in Lat. oriri, rise, arise, begin; cf. " origin ")
• ORDER, HOLY

order to make the contract legally enforceable by his principal against the third party, is contained in See also:

• SECTION
• SECTION (Lat. sectio, cutting, secare, to cut)

section 4 of the Sale of Goods Act 1893, which (in substance re-enacting section 17 of the See also:

• STATUTE

Statute of Frauds) provides as follows:—" A contract for thesale of any goods of the value of ten pounds or upwards shall not be enforceable by See also:

• ACTION

action unless the buyer shall accept See also:

• PART

part of the goods as sold, and actually receive the same, or give something in See also:

• EARNEST (probably a corruption of the obsolete arles or erles, adapted from Lat. equivalent arrha, due to a confusion with the adjective " earnest," serious, O. Eng. eornust, cognate with Ger. ernst)

earnest to bind the contract, or in part See also:

• PAYMENT (Fr. paiement, from payer, to pay; Lat. pacare, to appease, pax, peace)

payment, or unless some See also:

• NOTE
• NOTE (Lat. nota, mark, sign, from noscere, to know)

note or memorandum in See also:

• WRITING
• WRITING (the verbal noun of " to write," O. Eng. writan, to inscribe)

writing of the contract be made and signed by the party to be charged or his agent in that behalf." From the reign of See also:

• JAMES
• JAMES (Gr. 'IlrKw,l3or, the Heb. Ya`akob or Jacob)
• JAMES (JAMES FRANCIS EDWARD STUART) (1688-1766)
• JAMES, 2ND EARL OF DOUGLAS AND MAR(c. 1358–1388)
• JAMES, DAVID (1839-1893)
• JAMES, EPISTLE OF
• JAMES, GEORGE PAYNE RAINSFOP
• JAMES, HENRY (1843— )
• JAMES, JOHN ANGELL (1785-1859)
• JAMES, THOMAS (c. 1573–1629)
• JAMES, WILLIAM (1842–1910)
• JAMES, WILLIAM (d. 1827)

James I. till 1884 brokers in See also:

• LONDON

London were admitted and licensed by the See also:

• CORPORATION (from Lat. corporare, to form into a body, corpus, corporis)

corporation, and regulated by statute; and it was See also:

• COMMON

common to employ one broker only, who acted as intermediary between, and was the agent of both buyer and seller . When the Statute of Frauds was passed in the reign of See also:

• CHARLES
• CHARLES (1270-1325)
• CHARLES (1421-1461)
• CHARLES (1525-1574)
• CHARLES (c. 1319-1364)
• CHARLES (Fr. Charles; Span. Carlos; Ital. Carlo; Ger. Karl; derived from O.H.G. Charal,latinized as Carolus, meaning originally " man ": cf. Mod.Ger., Kerl," fellow," A.S. ceorl, Mod. Eng. " churl ")
• CHARLES (KARL EITEL ZEPHYRIN LUDWIG; in Rum. CAROL)
• CHARLES [KARL ALEXANDER] (1712-1780)
• CHARLES, ELIZABETH (1828-1896)
• CHARLES, JACQUES ALEXANDRE CESAR (1746-1823)
• CHARLES, THOMAS (1755-1814)

Charles II., it became the practice for the broker, acting for both parties, to insert in a formal See also:

• BOOK

book, kept for the purpose, a memorandum of each contract effected by him, and to sign such memorandum on behalf of both parties, in order that there might be a written memorandum of the contract of sale, signed by the agent of the parties as required by the statute . He would, then send to the buyer a copy of this memorandum, called the " bought note," and to the seller a " sold note," which would run as follows: " I have this See also:

• DAY (O. Eng. dreg, Ger. Tag; according to the New English Dictionary, " in no way related to the Lat. dies")
• DAY, JOHN (1574-1640?)
• DAY, THOMAS (1748-1789)

day bought for you from A B [or " my principal "] [signed] " M, Broker." " I have this day sold for you to A B [or " my principal ''] [signed] " M, Broker." There was in the earlier part of the 19th See also:

• CENTURY (from Lat. centuria, a division of a hundred men)

century considerable. discussion in the courts as to whether the entry in a broker's book, or the bought and sold notes (singly or together), constituted the statutory memorandum; and judicial See also:

• OPINION (Lat. opinio, from opinari, to think)

opinion was not unanimous on the point . But at the present day brokers are no longer regulated by statute, either in London or elsewhere, and keep no formal book; and as an entry made in a private book kept by the broker for another purpose, even if signed, would probably not be regarded as a memorandum signed by the agent of the parties in that behalf, the old discussion is now of little: See also:

• PRACTICAL

practical interest . Under modern conditions of business the written memorandum of the contract of sale effected by the broker is usually to be found in a " contract note "; but the question whether, in the particular circumstances of each See also:

• CASE
• CASE, JOHN (d. 1600)

case, the contract note affords a sufficient memorandum in writing, depends upon a variety of considerations—e.g. whether the transaction is effected through one or through two brokers; whether the contract notes are rendered by one broker only, or by both; and, if the latter, whether ex-changed between the brokers, or rendered by each broker to his own client; for under present practice any one of these methods may obtain, according to the See also:

• TRADE (O. Eng. trod, footstep, from tredan, to tread; in M. Eng. the forms teed, trod and trade appear, the last in the sense of a beaten track)
• TRADE, BOARD OF

trade in which the transaction is effected, and the nature of the particular transaction Where one and the same broker is employed by both seller and buyer, bought and sold notes rendered in the old See also:

• FORM (Lat. forma)

form provide the necessary memorandum of the contract . Where two brokers are employed, one by the seller and one by the buyer, sometimes one drops out as soon as the terms are negotiated, and the other makes out, signs and sends to the parties the bought and sold notes . The latter then becomes the agent of both parties for the purpose of See also:

• SIGNING

signing the statutory memorandum, and the position is the same as if one broker only had been employed . On the other See also:

• HAND
• HAND (a word common to Teutonic languages; cf. Ger. Hand, Goth. handus)
• HAND, FERDINAND GOTTHELF (1786-185r)

hand, if one broker does not drop out of the transaction, each broker remains to the end the agent of his own principal only, and neither becomes the agent of the other party for the purpose of signing the memorandum . In such a case it is the usual practice for the buyer's broker to send to the seller's broker a note of the contract,—" I, acting on See also:

• ACCOUNT
• ACCOUNT (through O. Fr. acont, Late Lat. comptum, cornputare, to calculate)

account of A . B . [or, " of my principal,"], have this day bought from you, acting on account of C .

D . [or, " of your principal "],"—and to receive a corresponding note from the seller's broker . Thus each of the parties receives through his own agent a memorandum signed by the other party's agent . These contract notes are usually known as, and serve the purpose of, " bought " and " sold " notes . In all the above three cases the broker's duty of compliance with all formalities necessary to make the contract of sale legally enforceable is performed, and both parties obtain a written memorandum of the contract upon which they can See also:

• SUE, EUGENE [JosEPH MARIE] (1804—1857)

sue . The broker, on performing his duty in accordance with the terms upon which he is employed, is entitled to be paid his " brokerage." This usually takes the form of a percentage, varying according to the nature and conditions of the business, upon the See also:

• TOTAL

total price of the goods bought or sold through him . When he guarantees the solvency of the other party, he is said to be employed upon del credere terms, and is entitled to a higher See also:

• RATE

rate of remuneration., In some trades it is the See also:

• CUSTOM (from O. Fr. costume, costume or coustume; Low Lat. costuma, a shortened form of consuetudo)

custom for the selling broker to receive payment from the buyer or his broker; and in such case it is his duty to account to his principal for the purchase See also:

• MONEY

money . A broker who properly expends money or incurs liability on his principal's behalf in the course of his employment, is entitled to be reimbursed the money, and indemnified against the liability . Not having, like a factor,' possession of the goods, a broker has no See also:

• LIEN

lien by which to enforce his rights against his principal . If he fails to perform his duty, he loses his right to remuneration, reimbursement and See also:

• INDEMNITY (through Fr. indemnite, Lat. indemnis, free from damage or loss; in-, negative, and damnum, loss)

indemnity, and further becomes liable to an action for See also:

• DAMAGES (through O. Fr. damage, mod. Fr. dommage, from Lat. damnum, loss)

damages for See also:

• BREACH (Mid. Eng. breche, derived from the common Teutonic root brec, which appears in " break," Ger. brechen, &c.)

breach of his contract of employment, at the suit of his principal . Relations between Broker and Third Party.—A broker who signs a contract note as broker on behalf of a principal, whether named or not, is not personally liable on the contract to the third party . But if he makes the contract in such a way as to make himself a party to it, the third party may sue either the broker or his principal, subject to the See also:

• LIMITATION, STATUTES OF

limitation that the third party, by his See also:

• ELECTION
• ELECTION (from Lat. eligere, to pick out)

election to treat one as the party to the contract, may preclude himself from suing the other .

In this respect the See also:

• ORDINARY (med. Lat. ordinarius, Fr. ordinaire)

ordinary rules of the law of agency apply to a broker . Generally, a broker has not authority to receive payment, but in trades in which it is customary for him to do so, if the buyer pays the seller's broker, and is then sued by the seller for the price by See also:

• REASON (Lat. ratio, through French raison)

reason of the broker having become insolvent or absconded, he may set up the payment to the broker as a See also:

• DEFENCE
• DEFENCE (Lat. defendere, to defend)

defence to the action by the broker's principal . Brokers may render themselves liable for damages in See also:

• TORT (Fr. for wrong, from Lat. tortus, twisted, participle of torquere)

tort for the See also:

• CONVERSION (Lat. conversio, from convertere, to turn or ,change)

conversion of the goods at the suit of the true owner if they negotiate a sale of the goods for a selling principal who has no See also:

• TITLE (0. Fr. title, mod. titre, from Lat. titulus)

title to the goods . The See also:

• INFLUENCE (Late Lat. influentia, from influere, to flow in)

Influence of Exchanges.—The relations between brokers and their principals, and also between brokers and third parties as above defined, have been to some extent modified in practice by the institution since the See also:

• MIDDLE

middle of the 19th century in important commercial centres of " Exchanges," where persons interested in a particular trade, whether as merchants or as brokers, meet for the transaction of business . By the contract of membership of the association in whose hands is vested the See also:

• CONTROL (Fr. contrdle, older form contre rolle, from Med. Lat. contra-rotulus, a counter roll or copy of a document used to check the original; there is no instance in English of the use of " control " in this, its literal, meaning)

control of the See also:

• EXCHANGE

exchange, every See also:

• PERSON, OFFENCES AGAINST THE

person on becoming a member agrees to be See also:

• BOUND, or BOUNDARY (from O. Fr. bonde, Med. Lat. bodena or butina, a frontier line)

bound by the rules of the association, and to make his contracts on the See also:

• MARKET (Lat. mercatus, trade or place of trade)

market in accordance with them . A governing See also:

• BODY

body or See also:

• COMMITTEE (from commute, an Anglo-Fr. past participle of commettre, Lat. committere, to entrust; the modern Fr. equivalent comite is derived from the Eng.)

committee elected by the members enforces observance of the rules, and members who fail to meet their engagements on the market, or to conform to the rules, are liable to suspension or See also:

• EXPULSION (Lat. expulsio, from expellere)

expulsion by the committee . All disputes between members on their contracts are submitted to an See also:

• ARBITRATION (Lat. arbitrari, to examine or judge)
• ARBITRATION, INTERNATIONAL

arbitration tribunal composed of members; and the arbitrators in deciding the questions submitted to them are guided by the rules . A printed book of rules is available for reference; and various printed forms of contract suited to the various requirements of the business are specified by the rules and supplied by the association for the use of members . In order to simplify the See also:

• SETTLEMENT
• SETTLEMENT, ACT OF

settlement of accounts between members, particularly in respect of " See also:

• FUTURES

futures," i.e. contracts for future delivery, a weekly or other periodical settlement is effected by means of a clearing-See also:

• HOUSE
• HOUSE (O. Eng. hiss, a word common to Teutonic languages, cf. Dut. huis, Ger. Haus; in Gothic it is only found in gudhiss, a temple; it may be ultimately connected with the root of " hide," conceal)

house; each member paying or receiving in respect of all his contracts which are still open, the See also:

• BALANCE (derived through the Fr. from the Late Lat. bilantia, an apparatus for weighing, from bi, two, and lanx, a dish or scale)

balance of his weekly " See also:

• DIFFERENCES, CALCULUS OF (Theory of Finite Differences)

differences," i.e. the difference between the contract price and the market price fixed for the settlement, or between the last and the present settlement prices . As all contracts on the market are made subject to the rules, it follows that so far as the rules alter the rights and liabilities attached by law, the ordinary law is modified . The most important modification in the position of brokers effected by membership of such an exchange is due to the See also:

• RULE

rule that as, between themselves, all members are principals, on the market no agents are recognized; a broker employed by a non-member to buy for him on the market is treated by the rules as buying for himself, and is, therefore, personally liable on the contract . If it be a contract in futures, he is required to conform to the weekly settlement rules .

If his principal fails to take delivery, the engagement is his and he is required to make good to the member who sold to him any difference between the contract and market price at the date of delivery . But whilst this practice alters directly the relations of the broker to the third party, it also affects or tends to affect indirectly the relations of the broker to his own principal . The terms of the contract of employment being a See also:

• MATTER

matter of negotiation and agreement between them, it is open to a broker, if he chooses, to stipulate for particular terms; and it is the usual practice of exchanges to See also:

• SUPPLY (through Fr. from Lat. supplere, to fill up)

supply printed contract forms for the use of members in their dealings with non-members who employ them as brokers, containing a stipulation that the contract is made subject to the rules of the exchange; and frequently also a clause that the contract is made with the broker as principal . In addition to these See also:

• EXPRESS (through the French from the past participle of the Lat. exprimere, to press out, by transference used of representing objects in painting or sculpture, or of thoughts, &c. in words)

express terms, there is in the contract of employment the See also:

• TERM

term, implied by law in all trade contracts, that the parties consent to be bound by such trade usages as are consistent with the express terms of the contract, and reasonable . On executing an order the broker sends to his client a contract-note either in the form of the old bought and sold notes " I have this day bought sold for you," or, when the principal clause is inserted, " I have this day sold to you." These are not bought and sold notes bought frdm proper, for the broker is not the agent of the third party for the purpose of signing them as statutory memoranda of the sale, But they purport to See also:

• RECORD (Lat. recordari, to recall to mind, from cor, heart or mind)

record the terms of the contract of employment, and the principal may treat himself as bound by their provisions . Sometimes They are accompanied by a detachable form, known as the " client's return contract note," to be filled in, signed and returned by the client; but even the " client's return contract note " is retained by the client's own broker, and is only a memorandum of the terms of employment . The following is a form of contract note rendered by a broker to his client for See also:

• AMERICAN

American cotton, bought on the See also:

• LIVERPOOL
• LIVERPOOL, EARLS
• LIVERPOOL, EARLS OF

Liverpool Cotton Exchange for future delivery . The client's contract note is attached to it, and is in precisely corresponding form .