[Code of Federal Regulations]
[Title 7, Volume 2]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR46.27]

[Page 269]
 
                          TITLE 7--AGRICULTURE
 
                        DEPARTMENT OF AGRICULTURE
 
PART 46_REGULATIONS (OTHER THAN RULES OF PRACTICE) UNDER THE 
PERISHABLE AGRICULTURAL COMMODITIES ACT, 1930--Table of Contents
 
Sec. 46.27  Types of broker operations.

    (a) Brokers carry on their business operations in several different 
ways and are generally classified by their method of operation. The 
following are some of the broad groupings by method of operation. The 
usual operation of brokers consists of the negotiation of the purchase 
and sale of produce either of one commodity or of several commodities. A 
broker is usually engaged by only one of the parties, but in negotiating 
a contract the broker acts as a special agent of first one and then the 
other party in conveying offers, counter offers, and acceptances between 
the parties. Once the contract is formed, and the confirmation issued, 
the broker's duties are usually ended, and the broker is not the proper 
party to whom notice of breach or of rejection should be directed. 
However, a broker receiving notice has a duty to promptly convey the 
notice to the proper party. Frequently, brokers never see the produce 
they are quoting for sale or negotiating for purchase by the buyer, and 
they carry out their duties by conveying information received from the 
parties between the buyer and seller until a contract is effected. 
Generally, the seller of the produce invoices the buyer, however, when 
there is a specific agreement between the broker and its principal, the 
seller invoices the broker who, in turn, invoices the buyer, collects, 
and remits to the seller. Under other types of agreements, the seller 
ships the produce to pool buyers, and the broker as an accommodation to 
the seller invoices the buyers, collects, and remits to the seller. 
Also, there are times when the broker is authorized by the seller to act 
much like a commission merchant, being given blanket authority to 
dispose of the produce for the seller's account either by negotiation of 
sales to buyers not known to the seller or by placing the produce for 
sale on consignment with receivers in the terminal markets.
    (b) There is a second general grouping of brokers which are commonly 
referred to as buying brokers. Their operations are typified by the fact 
that they act as the buyer's representative in negotiating purchases at 
shipping points, terminal markets, or intermediate points. Their typical 
type of operation is to negotiate a purchase on the buyer's instructions 
and authorization. Sometimes the broker negotiates the purchase without 
seeing the produce. In other instances he may select the merchandise 
after forming an appraisal of the quality of the produce being offered 
for sale on the market. Generally, a purchase is made in the buyer's 
name and the seller invoices the buyer direct. On the other hand, acting 
on authority given him by the buyer, the broker may negotiate purchases 
in his own name, pay the seller for the produce, make arrangements for 
its loading and shipment, and bill the buyer direct for the cost price 
plus the brokerage fee and the cost of any agreed upon accessorial 
service charges such as ice, loading, etc.

[28 FR 7067, July 11, 1963; 28 FR 7287, July 17, 1963, as amended at 62 
FR 15087, Mar. 31, 1997]