The term principal , which comes from the Latin word committens , is linked to the verb commit : undertake, make a mistake or, in the field of commerce , grant a commission . Principal is the adjective used to describe the one who commits .
The figure of the principal appears in the field of business . This is the person who commissions a commercial commission . The client agrees with the commission agent on a certain price as a quota for the development of commercial management.
It can be said, therefore, that the principal entrusts the commission agent with carrying out a commercial act on his behalf . The client must grant the commission agent the necessary resources to fulfill the order, reimburse him for his expenses and pay him what was agreed upon.
In other words: in a commission contract, the principal orders the commission agent to manage his business interests in exchange for monetary remuneration (also known as commission ). Generally this commission is a percentage of the total value of the completed transaction. The principal also has the obligation to guarantee that the commission agent has the means to comply with the mandate and to make him harmless from any possible damages that may occur within the framework of the exercise of the commission.
In a commission contract, the important thing is that both parties, principal and commission agent, agree and that it includes the aspects they have agreed upon. However, it is vital that it has a series of characteristics or identifying features such as the following:
-Neither of the two parties will be represented by anyone, that is, both are involved in the contract and participate directly in the aforementioned relationship.
-The commission agent must have the obligation to be accountable to the principal for the action that has been delegated to him. Specifically, you should focus on telling them where you are, how you are evolving or what operations and movements you are going to carry out.
-In the event that the commission agent, at a certain time and due to different circumstances, makes the decision not to continue with the order they had agreed upon, they must notify the client as soon as possible and as quickly as possible. It is the way for the latter to look for alternatives or another commission agent for the same work.
-Under no circumstances is it permitted for the commission agent to delegate the functions that the principal had delegated to him or her to another person. You will only be able to do so if you notify him and he gives you the go-ahead.
Regarding this type of contract, we can establish that there are two types: in his own name, when the commission agent carries out the action that has been delegated to him and does not reveal who the principal is, or in the name of the principal, when he does reveal it.
Suppose a person makes artisanal sweets. This individual can act as a client by hiring a commission agent to sell their products in a certain neighborhood. Both parties agree that, for each sale, the client will pay the commission agent a price equivalent to 15% of the value of the transaction. Thus, if the commission agent achieves sales for 1,000 pesos , the client will pay him 150 pesos .