A del credere commission is a commission which is paid as direct commission instead of paying through someone else. Del Crede commission is that of a

surety In finance, a surety , surety bond, or guaranty involves a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults. Usually, a surety bond or surety is a promise by a person or company (a ''sure ...

who is liable to the principal should the purchaser make default. The agreement between agent and principal need not be reduced to or evidenced by writing, for the undertaking is not a guarantee within the

Statute of Frauds The Statute of Frauds ( 29 Cha. 2. c. 3) (1677) is an act of the Parliament of England. In its original form it required that certain types of contracts, wills, and grants, and assignment or surrender of leases or interest in real property mu ...

( 29 Cha. 2. c. 3). A Del Credere Agent not only establishes a

privity of contract The doctrine of privity of contract is a common law principle which provides that a contract cannot confer rights or impose obligations upon anyone who is not a party to that contract. It is related to, but distinct from, the doctrine of considera ...

between the principal and the third party but also guarantees to the principal the due performance of the contract by the third party. The agent is liable, however, only when the third party fails to carry out their contract, e.g., by insolvency. The agent is not liable to the principal if the third party refuses to carry out the contract, for example if the buyer refuses to take delivery. In the case of ''United States v. Masonite Corp''., 316 U.S. 265 (1942), the U.S. Supreme Court evaluated the antitrust status of use of a ''del credere'' agency business structure. Such an arrangement often may, as it did in the ''Masonite'' case, involve the principal's fixing the price at which the agent sells the goods that the principal supplies it. The Supreme Court held that, although the parties’ agency agreement could be assumed genuine rather than sham, use of ''del credere'' agency does not necessarily insulate the firms from antitrust liability.The Court said, “We assume in this case that the agreements constituted the appellees as ''del credere'' agents of Masonite. But that circumstance does not prevent the arrangement from running afoul of the Sherman Act.” ''Masonite'', 316 U.S. at 277. The Court observed that the label the parties used for their agreement was not significant, because the Court “has quite consistently refused to allow the form into which the parties chose to cast the transaction to govern.” ''Id''. at 278. Moreover, although the contract may be useful “in allocating risks between the parties and determining their rights ''inter se'', its terms do not necessarily control when the rights of others intervene,” such as those of creditors or the public. ''Id''. at 276–77. Because the arrangement had the purpose of fixing competitors’ prices it was held illegal under Sherman Act § 1. The holding in ''Masonite'' thus seems to overrule partially the Supreme Court's earlier holding in ''United States v. General Electric Co''., 272 U.S. 476 (1926).

References

English legal terminology {{law-term-stub