FUNCTIONS

The functions of a broker, strictly speaking, should be specially distinguished from those of an ordinary agent, as well as from those of a comisionista. An agent or a mandatario, as he is called in civil law, usually has authority to perform some juridical act in the name of the principal, such as the making of a contract, and may not represent conflicting interests. The comisionista contracts in his own name for the account of the principal (he is an independent merchant and may engage in business for himself), but in the absence of express stipulation, as seen before, he may not buy for himself the goods which his principal entrusted him to sell nor buy for his principal goods which he may have in his possession, irrespective of the fact of whether they belong to him or to another. The broker is merely an intermediary between the offer and acceptance and as such does not contract as the other two may. Further, the broker acting in this capacity may act for the two parties without the necessity of express authority from the party who may have called upon him for his services and, as discussed hereafter, he may collect a commission fee from the two parties who have contracted through his services. Moreover, the law imposes upon him the absolute prohibition of engaging in business himself, directly or indirectly, which prohibition only leaves open to him the engaging in brokerage operations. It follows that a broker steps out of his role to assume that of an agent when, under conferred authority, he contracts in the name of the principal, that is, when he has been given authority to close a contract; and to assume that of a comisionista when authorized to contract in his own name for the account of another.

BOOKS

The law imposes upon a broker the obligation of carrying a memorandum book in which there should be entered, in order of dates, all the details pertaining to each brokerage operation. No special formalities are required as to the manner in which this book must be kept. He must also carry a register, which must be rubricated in accordance with the provisions of article 53 of the Code of Commerce, discussed hereinbefore, and in which there must be entered daily in detail and in their due order without any abbreviations or amendments the entries which during that day were made in the memorandum book. This book will have the same value in evidence as is accorded to the rubricated books of all merchants kept in the manner provided by law. (Arts. 91, 92, and 93, Code of Commerce.) Within the 24 hours following the making of a contract a broker is bound under the provisions of article 102 of the Code of Commerce to deliver to each of the contracting parties a signed copy of the entry which, with respect to the particular contract in question, was made in the register book. Failure to do so will be a bar to the recovery of any commission fee, besides rendering the broker liable for any damages arising from such failure. When two brokers have participated in the making of the particular contract, the provisions of this article would seem to be satisfied if each gives his party a copy of his own respective entry, unless one entry is signed and executed by the two acting in accord and a copy of such entry is given to each party.

CONDUCT

Brokers must ascertain for themselves the identity and the legal capacity of their clients. If with knowledge or through negligence on their part they should have intervened in a contract made by a person who under the law was not capacitated to make it, they are liable for any damages arising from such negligence or fraud. (Art. 96, Code of Commerce.) They are bound to state the facts correctly in a clear and precise fashion, refraining from making any misrepresentations as are apt to lead the contracting parties into error. Failure to observe such conduct makes them liable for any damages arising from such misrepresentations. (Art. 98, Code of Commerce.) Article 99 of the same code provides that a statement of quality, which is different from that attributed by the general usage of commerce, or of price, or which is different from the current market price, will be regarded as misrepresentations of the kind embraced in the provisions of article 98. The provisions of article 99 are illustrative rather than limitary.

RELATIONSHIP OF TRUST

A broker is bound under the provisions of article 100 of the Code of Commerce to treat as strictly confidential any information intrusted to him by the parties in whose negotiations he is intervening, and he is liable for any damages which may arise from his failure to do so. In his ordinary activities a broker must of necessity disclose certain information to the parties with whom he may be negotiating, as otherwise it would be impossible for him to work at all. In the light of the foregoing consideration the provisions of the abovequoted article have been construed to mean that the disclosure must be made to a third party not interested at all in the particular transaction before any liability may arise therefrom. Liability also arises should the disclosure prove to be fraudulent. The same rule of responsibility applies when it comes to disclosing the names of the parties. Strictly speaking, there comes a time in the course of the negotiations of a broker when he must disclose the names of the parties. However, he should exercise care and discretion in not doing so before the time is ripe for such disclosure, as otherwise his conduct may be negligent and be the source of liability for any damages arising therefrom.

A broker may not give a certificate unless it is for something which has been entered in his register or with reference to it. He may only testify with respect to what he saw or heard in his business operations when ordered to do so by a proper court. (Art. 94, Code of Commerce.) A broker extending a certificate contrary to the entries in his books shall be discharged, besides incurring the criminal liability for such offense. (Art. 95, Code of Commerce.)

SOLVENCY OR OBLIGATIONS OF PARTIES

Under the provisions of article 97 of the Code of Commerce, a broker in the absence of fraud on his part is not liable for the insolvency of any of the contracting parties. Furthermore, under the law a broker is incapacitated to guarantee the solvency of any one of the contracting parties. In other words, there may not be a del credere

broker as there is a del credere comisionista, which fact illustrates another point of distinction between the broker and the comisionista. Article 107 of the Code of Commerce declares null and of no legal effect whatsoever in litigation any guaranty, aval, or security, given by a broker for the performance of the obligations arising from a contract made through his intervention, irrespective of the fact of whether this be executed as part of the general contract or as an independent act.

The second paragraph of article 97 provides as an exception to the general rule that a broker in transactions concerning bills of exchange and indorsable securities shall be a guarantor for the delivery of the material subject matter of the security to the taker, and for the delivery of the value to the assignor, and responsible for the authenticity of the signature of the last assignor, unless it has been expressly stipulated in the contract that the contracting parties shall effect delivery direct.

MISCELLANEOUS DUTIES AND PROHIBITIONS

If any one of the contracting parties should so require it, a broker, through the intervention of whom a sale has been made, is bound to be present when delivery of the subject matter of the sale takes place. He is also bound, unless the contracting parties relieve him from such obligation, to keep samples of all the merchandise sold through his intervention until the time of delivery, taking at the same time all the necessary precautions in order that the identity of such merchandise may be ascertained. (Art. 101, Code of Commerce.)

In transactions in which, through private agreement of the parties or through operation of law, the contract is to be reduced to writing, a broker must be present at the time such contract is signed by all the parties and must certify in said contract that the same was made through his intervention, keeping a copy of it for his own records. (Art. 103, Code of Commerce.)

Since, as said before, a broker is regarded in a certain sense by the law as a public officer, article 104 of the Code of Commerce provides that on his discharge he must turn his books over to the competent commercial court, and upon his death his heirs are bound to comply with such obligation. It would seem that this same obligation should be extended in the case of his retiring from business, although the article under consideration is silent on this point.

Article 105 of the Code of Commerce forbids brokers (a) from engaging for themselves in a business of any kind whatsoever, either directly or indirectly, in their own name or in that of another, which prohibition, as said before, only leaves open to them the engaging in brokerage operations; (b) from forming a partnership of any kind; (c) from having an interest in ships or their cargoes; (d) from undertaking to make collections or payments for the account of another; and (e) from buying for themselves or for any member of their immediate family the things whose sale has been entrusted to them or those which may have been given to another broker to sell, even though it is alleged that the things bought were for private consump

tion.

Failure to observe any of the above-stated provisions of article 105 affords grounds for discharge, and in the case of (a), (b), and (c)

brings about the nullity of the contract. By way of exception to the foregoing, brokers are allowed under the provisions of article 106 of the Code of Commerce to acquire Government securities, as well as shares of corporations in which they may not be directors, administrators, or managers. Brokers are likewise forbidden (a) to take part in contracts which are illegal or disapproved by law, whether on account of the status of the contracting parties or of the nature of the subject matter of the contract, or of the agreements or conditions connected therewith; (b) to offer bills of exchange or securities of any other kind, or merchandise coming from persons who are not known in the place, unless a merchant is present and vouches for the identity of the person; (c) to take part in a contract of sale of goods, or negotiate bills of exchange belonging to a person who has suspended payment; and (d) to have, outside of his brokerage, an interest in a higher price which he may obtain in the transactions, or to demand a brokerage larger than the established legal brokerage or than that which the proper legislative authorities may enact in the future, saving an agreement to the contrary. (Art. 108, Code of Commerce.)

BROKERAGE FEE

If a contract has been made through the intervention of only one broker, he is entitled, under the provisions of article 111 of the Code of Commerce, to receive a fee from each of the contracting parties. When two or more brokers have participated, then each of them is entitled to receive a brokerage fee from the party who employed him. The fee is owed if the contract is not made through the fault of any one of the contracting parties or where the negotiation has been begun by the broker and the principal has intrusted its conclusion to another person or has concluded it himself. A brokerage fee may not be collected by a person who has not registered as a broker or who does not have the necessary qualifications to be a broker. (Art. 89, Code of Commerce.)

BANKRUPTCY

A broker who becomes bankrupt shall be dismissed by the competent tribunal, and his bankruptcy shall be considered fraudulent when embraced within the provisions of article 1551 of the Code of Commerce. (Art. 112, Code of Commerce.)

PROVISIONS OF THE CIVIL CODE

The following quoted articles of the Argentine Civil Code contain the fundamental provisions of law governing the subject of agency. As stated before, they are applicable to commercial-agency agreements in those cases where provision has not been made in the Code of Commerce for the solution of any particular question arising therefrom. Articles 1879 to 1888 have been omitted here as they appear quoted in the section entitled "Powers of attorney."

MANDATE (AGENCY)

1903 (1869). A mandate, as a contract, takes place when one party gives another the power, which the latter accepts, to represent him, for the purpose of executing in his name and for his account some lawful act, or a series of acts of this nature.

1904 (1870). The provisions of this title are applicable:

(1) To necessary representations and to the representations of those who, on account of their public office, are required to represent certain classes of persons, or certain classes of property, insofar as not opposed to the special laws thereon.

(2) To the representations of corporations and of establishments of public utility.

(3) To the representations for the administration or liquidation of associations, in cases in which it is so provided in this code, and in the Code of Commerce.

(4) To the representations for dependent persons, such as children under the paternal power in relation to their parents, a servant in relation to his master, an apprentice in relation to his teacher, a soldier in relation to his superior, which shall be governed by the provisions of this title, if they do not necessarily presuppose a contract between the representative and the person represented.

(5) To representations by unauthorized agents.

(6) To judicial procurations, insofar as not in conflict with the provisions of the Code of Procedure.

(7) To representations by testamentary or dative executors.

1905 (1871). A mandate may be gratuitous or onerous. The presumption is that it is gratuitous when it has not been stipulated that the mandatary is to receive compensation for his work. The presumption is that it is onerous when it consists of powers or functions conferred upon the mandatary by the law, and when it consists of work constituting the paid profession of the mandatary, or his means of livelihood.

1906 (1872). The power which the mandate confers is limited to that which the principal could do if he were to proceed or act in person. 1907 (1873). A mandate may be express or implied. An express mandate may be conferred by a public or private instrument, by letters, and also verbally.

1908 (1874). An implied mandate results not only from the positive acts of the principal, but also from his nonaction or silence or from his not preventing it, if able to do so, when he knows that some one is doing something in his

name.

1909 (1875). The mandate may be accepted in any form expressly or impliedly. An express acceptance results from the same acts and forms as an express mandate.

1910 (1876). An implied acceptance results from any act of the mandatary in execution of the mandate, or even from his silence.

1911 (1877). Between persons present, the acceptance of the mandate is presumed if the principal delivered his power of attorney to the mandatary and the latter received it without any protest whatsoever.

1912 (1878). Between persons absent, the acceptance of the mandate does not result from the silence of the mandatary, except in the following cases: (1) When the principal transmits his power of attorney to the mandatary and the latter receives it without any protest.

(2) When the principal confers upon him by letters a mandate relating to business, which, on account of his trade, profession, or means of livelihood, he is accustomed to receive and he does not make any answer to the letters.

OBJECT OF MANDATE

1923 (1889). All lawful acts susceptible of producing an acquisition, modification, or extinction of rights may be the object of a mandate.

1924 (1890). A mandate does not confer representation, nor does it extend to dispositions of last will, nor to acts inter vivos, the exercise of which by mandataries is prohibited by this code or other laws.

1925 (1891). A mandate to perform an unlawful, impossible, or immoral act does not give any right of action whatsoever to the principal against the mandatary, nor to the latter against the principal, unless the mandatary does not know or should not have any reason to know that the mandate was unlawful.

1926 (1892). The object of a mandate may be two or more transactions of exclusive interest to the principal, or of common interest to the principal and mandatary, or of common interest to the principal and third persons, or of exclusive interest to a third person, but not in the exclusive interest of the mandatary.