The factor’s act is a law designed to safeguard individuals purchasing goods from someone acting as a representative for another party. This legislation assumes that the representative had the owner’s consent and authorization, providing assurance to the buyer that their purchase is valid.
The Factor’s Act is a law that safeguards buyers of goods from factors or agents. This law establishes a presumption that the agent was acting on behalf of and with the approval of the owner.
For instance, John, the owner of a clothing store, hires a factor to sell his products. The factor sells a defective shirt to Sarah. Despite purchasing it from the factor, Sarah can use the factor’s act to hold John accountable for the faulty shirt. This is because the law assumes that the factor was acting on John’s behalf and with his approval. Another example is when a farmer employs a broker to sell his crops. The broker sells the crops to a buyer, who later discovers their poor quality. The buyer can invoke the Factor’s Act to hold the farmer responsible for the subpar crops, even though they were purchased from the broker.
These examples demonstrate how the Factor’s Act safeguards buyers from being held liable for the actions of agents or factors. It ensures that the owner of the goods ultimately bears responsibility for any defects or issues with the products sold by their agents.
The Factor’s Act is a legal statute that governs the relationship between a principal and a factor, where the factor acts as an agent for the principal in conducting business transactions.
A factor is an individual or entity who is authorized by the principal to sell goods, purchase goods, or negotiate contracts on behalf of the principal.
The duties of a factor include acting in good faith, exercising reasonable care and skill, keeping proper accounts, and promptly remitting the proceeds of sales to the principal.
No, a factor cannot sell goods on credit without the principal’s consent unless it is customary in the trade or the principal has given prior authorization.
A factor cannot pledge or mortgage the goods of the principal unless it is necessary for the purpose of raising funds to carry out the principal’s instructions or with the principal’s consent.
If a factor fails to remit the proceeds of sales to the principal, the principal can take legal action to recover the amount owed, including filing a lawsuit for breach of contract.
Yes, a factor can be held liable for any losses incurred due to their negligence, breach of duty, or failure to exercise reasonable care and skill in carrying out their agency.
A factor can delegate their duties to another person only with the principal’s consent, unless it is customary in the trade or the delegation is necessary for the proper performance of the agency.
Yes, a factor can claim a lien on the goods of the principal for any amount due to them, including commission, advances, or expenses incurred in the course of their agency.
Yes, a factor can terminate their agency relationship with the principal by giving reasonable notice, unless the agency is for a fixed term or a specific purpose. However, the termination does not affect any rights or liabilities that have already arisen under the Factor’s Act.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 30th April 2024.
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