Broker Payment: Who pays who?

Broker is the term often used by fruit and vegetable dealers to describe a person or entity that conducts a variety of commercial activities. A true broker’s (see definition below) DRC role is to facilitate good faith negotiations between parties which leads to a valid and binding contract.


After the broker has helped the buyer and the seller negotiate a valid and binding contract, the broker is expected to issue a written or electronic confirmation, normally known as a Confirmation of Sale. This confirmation must detail the identity of both seller and buyer as well as each of the contract terms that the buyer and seller have agreed to. A copy of the confirmation must be delivered to both the seller and buyer. It is important to recognize that, unless otherwise agreed, a broker does not guarantee the performance of either of the contracting parties.


Whenever a valid and binding contract is established and the proper confirmation or memorandum of sale is issued, the broker is entitled to prompt payment of the brokerage fees.


Brokerage fees may be charged to only one of the parties -the party who engaged the broker. However, what happens if the confirmation or memorandum of sale does not identify the party who engaged the broker to negotiate the transaction? In that case, the broker will be assumed to have been engaged by the buyer. Unless, by prior agreement, the parties have agreed to split the brokerage fee, the fee will be deemed to be payable in full by the buyer.



Note: A Broker is defined as any person engaged in the business of negotiating sales and purchases of produce for or on behalf of the vendor or purchaser, respectively. (Definitions 19.4, Operating Rules, Part 4, Trading Standards and Related Guidelines)

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