Chapter 22: Contracts For Brokerage

Article 414     A brokerage contract refers to a contract whereby the broker is, in his/her own name , engaged in trade activities for the benefit of the principal, and the principal pays the remuneration.

Article 415     The expenses of the broker occurred in handling the entrusted matters shall be borne by the broker except as otherwise agreed upon by the parties in the contract.

Article 416     When possessing the entrusted articles, the broker shall keep in appropriate store the said articles.

Article 417     If the entrusted articles have defects or are perishable or have deteriorated when they are delivered to the broker, the broker may dispose of these articles with the consent of the principal. Where the principal cannot be contacted in time, the broker may dispose of these articles in a reasonable manner.

Article 418     Where the broker sells at a lower price or buys at a higher price than the price fixed by the principal, consent shall be obtained from the principal. Without the principal's consent, the transaction shall be effective to the principal if the broker makes up the price difference.

Where the broker sells at a higher price or buys at a lower price than the price fixed by the principal, remuneration may be raised according to the terms of the contract. Where there is no such agreement in the contract or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this Law, the benefits shall belong to the principal.

Where the principal has special instructions on price, the broker may not buy or sell violating these instructions.

Article 419     When selling or buying commodities of market fixed price, the broker may act as a buyer or seller, unless the principal expresses oppositely.

The broker may still request the principal under the circumstances stipulated in the preceding paragraph to pay the remuneration.

Article 420     Where the broker buys in the entrusted articles according to the terms of the contract, the principal shall accept the said articles in time. If, after the broker's urging with a notice, the principal refuses to accept the articles without justified reasons, the broker may deposit the entrusted articles according to the provisions of Article 101 of this Law.

If the entrusted articles cannot be sold out or the principal revokes the sale, and the principal does not take back or dispose of the goods after the broker's urging with a notice, the broker may have the entrusted articles deposited according to the provisions of Article 101 of this law.

Article 421     Where a contract is concluded between a broker and a third party, the broker shall directly have the rights and assume obligations under the contract.

If the third party fails in performing its obligations and causes losses to the principal, the broker shall be liable for damages, except as otherwise agreed upon by the parties.

Article 422     The principal shall pay to the broker corresponding remuneration when the broker has finished the whole or part of the entrusted matters. Where the principal fails to pay the remuneration in due time, the broker shall have the right to lien on the entrusted articles, except as otherwise agreed upon by the parties.

Article 423     Matters not addressed in this chapter shall apply the relevant provisions governing commission contracts.