Distinguishing commercial intermediary activities in commercial activities

| Updated: 23/12/2023

Commercial brokerage activities are currently being chosen by many businesses to apply in their business due to their high efficiency. However, businesses also need to be careful not to confuse different forms of commercial intermediaries. Determining the correct nature of the relationship with an intermediary partner as well as choosing the right type to suit business needs is extremely important and determines the performance of the business.

Financial management true to the nature of commercial intermediaries will help businesses accurately grasp their financial situation, comply with the law and have a basis for making effective business decisions.

1. Commercial brokerage

Commercial brokerage is a commercial activity whereby a trader acts as an intermediary (called the broker) for parties buying and selling goods or providing services (called the broker) in negotiating, enter into contracts to purchase and sell goods and services and receive remuneration according to the brokerage contract (Article 150 LTM).

2. Activities Representing traders

Representing a trader is the act of a trader receiving authorization (called the representative) from another trader (called the principal) to carry out commercial activities in the name and according to the instructions of the trader. that person and receive remuneration for representation (Article 141 LTM).

To clarify, let us compare Commercial Brokerage and Trader Representation activities

 

Commercial Brokerage Activities

Activities Representing traders

Definition

Commercial brokerage is a commercial activity whereby a trader acts as an intermediary (called the broker) for parties buying and selling goods or providing services (called the broker) in negotiating, enter into contracts to purchase and sell goods and services and receive remuneration according to the brokerage contract (Article 150 LTM).

Representing a trader is the act of a trader receiving authorization (called the representative) from another trader (called the principal) to carry out commercial activities in the name and according to the instructions of the trader. that person and receive remuneration for representation (Article 141 LTM).

Role of intermediaries

The broker assists the brokered party in negotiating and concluding goods purchase and sale contracts; The broker acts as a bridge for buyers and sellers to meet each other.

The representative carries out commercial activities for the principal.

The broker does not participate in the performance of contracts between brokered parties, unless authorized by the brokered party.

The representative is authorized to carry out commercial transactions (including entering into contracts) with third parties on behalf of the principal.

The broker does not represent the interests of any party.

The representative works according to the principal's instructions, representing the principal's interests.

Party on behalf of

The broker carries out brokerage activities on its own behalf.

The representative carries out commercial activities in the name of the principal.

Time when the right to receive remuneration arises

The right to receive brokerage remuneration arises from the moment the brokered parties have signed a contract with each other (unless otherwise agreed).

The right to receive representation remuneration arises from the time agreed upon by the parties in the representation contract.

Contract form

Commercial brokerage contracts do not necessarily have to be in writing.

The contract representing the trader must be made in writing or in another form with equivalent legal validity (telegram, telex, fax, data message and other forms as prescribed by law).

The basic difference between commercial brokerage and commercial agency activities lies in the scope of authorization.

Specifically, in commercial brokerage activities, the broker only acts as an intermediary to introduce and connect parties without being authorized to participate in contracts or represent any party.

Meanwhile, in commercial agency activities, the agent is authorized by the principal to perform commercial activities on behalf of the principal within the scope of authorization.

3. Entrust the purchase and sale of goods

Entrusted purchase and sale of goods is a commercial activity whereby the entrusted party conducts the purchase and sale of goods in his or her own name under the conditions agreed upon with the entrusting party and receives entrustment remuneration (Article 155). XNUMX LTM).

To clarify, we compare Commercial Brokerage activities and Entrusted goods purchase and sale activities as follows:

 Commercial Brokerage ActivitiesEntrusted goods purchase and sale activities
Khai thoughtCommercial brokerage is a commercial activity whereby a trader acts as an intermediary (called the broker) for parties buying and selling goods or providing services (called the broker) in negotiating, enter into contracts to purchase and sell goods and services and receive remuneration according to the brokerage contract (Article 150 LTM).Entrusted purchase and sale of goods is a commercial activity whereby the entrusted party conducts the purchase and sale of goods in his or her own name under the conditions agreed upon with the entrusting party and receives entrustment remuneration (Article 155). XNUMX LTM).
Subject+ Broker: must be a trader.
+ Brokered party: Trader or non-trader.
+ Entrusted party: Merchant trading in goods consistent with the entrusted goods.
+ Entrusting party: Merchant or non-trader.
RoleThe broker acts as a bridge for buyers and sellers to meet, and is an intermediary in negotiating and concluding contracts; Do not participate in implementing the contract between the parties (unless authorized).The entrusted party carries out the purchase and sale of goods for the entrusting party.
Party on behalf ofThe broker operates on its own behalf and does not represent the interests of any of the brokered parties.The trustee acts in its own name, representing the interests of the trustor.
Legal responsibilityThe broker is responsible for the legal status of the brokered party, not responsible for their ability to pay.The entrusted party has the obligation to be jointly responsible for the entrusting party's violations of law, if the cause of that violation of law is partly due to his or her own fault.
Contract formCommercial brokerage contracts do not necessarily have to be made in writing.The contract for entrustment of goods purchase and sale must be made in writing or in another form with equivalent legal validity.

The main difference between commercial brokerage activities and goods purchase and sale entrustment lies in the level of participation of the parties in carrying out the transaction.

Specifically, in commercial brokerage activities, the broker does not directly participate in the implementation of the contract between the parties but only plays the role of intermediary.

On the contrary, in entrusted goods purchase and sale activities, the entrusted party directly participates in goods buying and selling activities with a third party on behalf of the entrusted party.

4. Commercial agent

Commercial agency is a commercial activity whereby the principal and the agent agree on the agent's behalf to buy and sell goods to the principal or provide services to the principal. to customers for remuneration (Article 166 LTM).

 Commercial Brokerage ActivitiesCommercial Agent Activities
DefinitionCommercial brokerage is a commercial activity whereby a trader acts as an intermediary (called the broker) for parties buying and selling goods or providing services (called the broker) in negotiating, enter into contracts to purchase and sell goods and services and receive remuneration according to the brokerage contract (Article 150 LTM).Commercial agency is a commercial activity whereby the principal and the agent agree on the agent's behalf to buy and sell goods to the principal or provide services to the principal. to customers for remuneration (Article 166 LTM).
Subject+ Broker: must be a trader.
+ Brokered party: Trader or non-trader.
+ Agent: Merchant (delivers goods, money, authorizes service provision).
+ Agent: Trader
RoleThe broker acts as an intermediary in negotiating and signing contracts between the brokered parties.The agent is the intermediary
buying and selling goods to the principal or providing services from the principal to customers.
Party on behalf ofThe broker operates on its own behalf, does not represent the interests of any party, and does not participate in implementing contracts between parties (except in cases of authorization).The agent acts on its own behalf; name on the contract, being the subject of the contract for purchase and sale of goods and provision of services.
RelationshipThe relationship between the broker and the broker is a one-time, short-term contractual relationship.The relationship between the agent and the principal is a long-term contractual relationship.
Right to decide selling priceThe broker does not have the right to decide the selling price of goods or provision of services between the brokered parties.The offtake agent has the right to decide the selling price of goods and provide services to customers.
Contract formBrokerage contracts do not necessarily have to be in writing.An agency contract must be made in writing or in another form of equivalent legal validity.

The important difference between commercial brokerage and commercial agency activities lies in the roles and responsibilities of the parties in the contract.

Specifically, the broker does not directly participate in the implementation of the contract between the parties and is not named on the contract.

On the contrary, the agent is the party that signs and enforces the contract, and is the subject of the sale and service provision contract with a third party.

However, in reality there are many cases where businesses confuse these two activities. Therefore, it is necessary to make a clear distinction to correctly determine the legal nature of the parties.

5. Can I sign a commercial brokerage contract with an individual?

According to the provisions of Article 150 of the 2005 Commercial Law, commercial brokerage is specifically regulated as follows:

“Commercial brokerage is a commercial activity whereby a trader acts as an intermediary (called the broker) for parties buying and selling goods or providing services (called the broker) in negotiations. , enter into contracts to buy and sell goods and services and receive remuneration according to the brokerage contract.”

Based on the above regulations, in a commercial brokerage contract, the broker is required to be a trader, and the brokered party does not necessarily have to be a trader (the brokered party can be a trader or individual). , organization,…)

To effectively manage finances for commercial intermediary activities, businesses need to pay attention to:

  • Clearly identify the type of commercial intermediary that the business is applying (commercial brokerage, commercial agency, import-export trust, etc.) based on operational characteristics and relationships with related parties.
  • Based on the type of commercial intermediary, accurately determine the income and expenses arising from that activity. 
  • Establish appropriate accounting, statistical and reporting systems to track details of economic transactions arising related to commercial intermediary activities.
  • Comply with accounting, tax and legal regulations related to each type of commercial intermediary that the business is applying.
Tag #

Reading time: 12 min

Category

Meet an expert now

Helps you understand the problem properly before deciding on a solution.

You need a Solution

We are ready to accompany you to understand correctly and do correctly.

Freedom to explore

Experience it your way! Access the knowledge base.
Sign up
CONSULTATION NOW

We will help you understand correctly and propose a detailed solution that best suits your needs and goals.