BROKER/BROKERAGE

I.     GENERAL.

        A.     DEFINITIONS.

A broker is a middle person or negotiator between parties. He or she conducts transactions in a specialized field, but the broker does not have custody of the property. The person who employs a broker is called the principal. Brokerage is the fee charged by a broker for transacting business.

        B.     WHY BROKERS ARE EMPLOYED.

Brokers are often employed to transact business or to negotiate bargains between different individuals. By specializing in a single line or a limited number of lines of business, they acquire a knowledge and skill that an average merchant does not possess. It is often advantageous for large firms to employ brokers to buy their raw materials. Brokers may also specialize in real estate, insurance. or securities. The business of brokerage is regulated largely by the customs of the particular trade.

II.     DUTIES OF BROKER.

        A.     A BROKER'S LIABILITY.

A broker usually has no special property in the goods he or she sells. If the broker does not disclose the principal's name the broker is liable to the same extent as other agents. (See AGENCY: AGENTS' RESPONSIBILITY.) The broker must serve faithfully and cannot act for both parties in the same transaction without the consent and knowledge of both. Neither can the broker delegate the powers without the principal's assent. He or she is bound to obey the express instructions of the principal, and to keep accurate accounts of all transactions.

        B.     BROKER'S COMPENSATION.

Usually a broker's compensation is a commission or percentage of the value of the thing sold or exchanged. If the amount of the compensation is not fixed, the custom of the trade rules. A broker is entitled to a reasonable compensation for his services.

III.     SPECIFIC EXAMPLES.

        A.     REAL ESTATE BROKER.

must act for his principal alone. He or she is employed to negotiate sales and exchanges of land, and often has such additional duties as renting real estate, collecting rent, and procuring loans. To gain his commission on the sale he or she must produce a customer who is ready, able, and willing to accept and live up to the terms of the sale. A property owner cannot avoid paying the commission or brokerage by selling the property personally, or at a lower price than listed with the broker.

        B.     PAWNBROKERS.

The business of a pawnbroker, the rate of interest that may charge, and the sale of pawned goods are usually regulated by law. A license is usually required and the business is always subject to regulation and control. Suppose A takes a watch to a pawnbroker who advances him $20. A, or his assignee, or the purchaser of the pawn ticket, may redeem it within the fixed time, or even beyond that time if the pawnbroker has not exercised his right to sell the watch. A, the pawner, has the right to assign or sell his interest in the watch. If A fails to redeem the watch, the pawnbroker can usually hold him for any deficiency after the watch is sold. SEE ORS 726.020, et seq.