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 BROKERS that the contract shall not be construed as incorporating any custom or usage which, in the opinion of the court, is unreasonable, unless the party to be bound by it actually knew of it beforehand, or by his conduct is precluded from saying that he did not know of it. A custom which is inconsistent with the fundamental nature of the contract is considered by the courts as unreasonable ; e.g., a custom that a broker employed to buy as broker may convert himself into a principal contracting party and sell to his client on his own account. The ‘ ‘ principal ” clause in the above form of contract note would not be binding unless assented to. So also the practice above mentioned by which the broker omits to obtain a properly signed memorandum of the contract upon which his principal can sue, would be held unreasonable. The important question therefore which arises in considering the duty of a broker to his client, is, in practice usually, whether the client has actually consented (or must be taken to have consented) to be bound by some usage which is unreasonable, and would not bind him without that consent. This is a question of fact in each case, and depends on what notice the client has had of the particular usage. It is chiefly as evidence of consent, or at any rate of notice, that the printed forms of contract notes sent by brokers to their clients incorporating the rules and customs of the Exchange or market, are important. If in any case it appears that the printed forms have been brought to the previous notice of the client, there will be evidence (of which the force will no doubt differ according to the circumstances of every case) from which to infer the client’s consent to the custbms and rules referred to in the form. If the client receives and signs a “return note,” the evidence of his consent becomes practically conclusive. In this context, however, the rule of evidence should not be forgotten, that a contract in writing cannot be varied by extrinsic evidence ; and therefore if the terms upon which the broker is employed have previously been reduced to writing, evidence whether oral or written of usages or rules inconsistent with those terms will be inadmissible ; and even if a client signed such a “return note” as above mentioned, the reference therein to the rules and usages of the particular market would not serve to alter the contract already made ; nor would it constitute a new contract, for there would be no fresh consideration. The broker, on performing his duty in accordance with the terms upon which he is employed, is entitled to be paid his brokerage. This usually takes the form of a percentage, varying according to the nature of business, upon the total price of the goods bought or sold through him. When he guarantees the solvency of the other party, he is said to be employed upon del credere terms, and is entitled to a higher rate of remuneration. If he fails to perform his duty, he loses his right to remuneration, reimbursement, and indemnity, and further becomes liable to an action for damages for breach of his contract of employment, at the suit of his principal. The measure of damages will, in the absence of any special arrangement, be the difference between the contract price and the market price at the time of the breach. In some trades it is the custom for the selling broker to receive payment from the buyer or his broker; and in such case it is his duty to account to his principal for the purchase money. A broker who properly expends money or incurs liability on his principal’s behalf in the course of his employment, is entitled to be reimbursed the money, and indemnified against the liability. Not having, like a factor, possession of the goods, a broker has no lien by which to enforce his rights against his principal. 2. Relations between Broker and Third Party.—A. broker who signs a contract note as broker on behalf of a principal, whether named or not, is not personally liable on the contract to the third party. But if he makes the contract in such a way as to make himself a party to it, the third party may sue either the broker or his principal, subject to the limitation that the third party, by his election to sue one, precludes himself from suing the other. In this respect the ordinary rules of the law of agency apply to a broker. Brokers who are members of Exchanges are personally liable to any member with whom they contract, whether he be a merchant or a broker ; because by joining the association each member contracts to be bound by the rules, one of which is that all members are between themselves principals. Generally, a broker has

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not authority to receive payment, but in certain trades it is customary for him to do so, and in such trades if the buyer pays the seller’s broker, and is then sued by the seller for the price by reason of the broker having become insolvent or having absconded, he may set up the payment to the broker as a defence to the action by the broker’s principal. A payment by the buyer to his own broker is no defence to an action by the seller unless the seller has led the buyer to believe that he has already settled with the buyer’s broker. Brokers may render themselves liable for damages in tort for the conversion of the goods at the suit of the true owner if they negotiate a sale of the goods for a selling principal who has no title to the goods. A stockbroker is a broker who contracts for the sale of stocks and shares. Stockbrokers ditt'er from brokers proper chiefly in that stocks and shares are not ‘ ‘ goods, ” and the requirement of a memorandum in writing, enacted by the Sale of Goods Act, 1893, does not apply. Hence actions may be brought by the principals to a contract for the sale of stocks and shares although no memorandum in writing exists. For instance, the jobber, on failing to recover from the buyer’s broker the price of shares sold, by reason of the broker having failed and been declared a defaulter, may sue the buyer whose “name was passed” by the broker. The employment of a stockbroker is subject to the rules and customs of the Stock Exchange, in accordance with the principles discussed above, which apply to the employment of brokers proper. A custom which is illegal, such as the Stock Exchange practice of disregarding Leeman’s Act, which enacts that contracts for the sale of jointstock bank shares shall be void unless the registered numbers of the shares are stated therein, is not binding on the client to the extent of making the contract of sale valid. But if a client choose to instruct his broker to buy bank shares in accordance with that practice, the broker is entitled to be indemnified by his client for money which he pays on his behalf, even though the contract of sale so made is unenforceable. For further information the reader is referred to the article and to the treatises on the law of the Stock Exchange. An insurance broker is an agent whose business is to effect policies of marine insurance. He is employed by the person who has an interest to insure, pays the premiums to the underwriter, takes up the policy, and receives from the underwriter payment in the event of a loss under the policy. By the custom of the trade the underwriter looks solely to the broker for payment of premiums, and has no right of action against the assured; and, on the other hand, the broker is paid his commission by the underwriter, although he is employed by the assured. Usually the broker keeps a current account with the underwriter, and premiums and losses are dealt with in account. It is only in the event of the underwriter refusing to pay on a loss, that the broker drops out and the assured sues the underwriter direct. Ship-brokers are, firstly, “commission agents,” and, secondly, very often also ships’ managers. Their office is to act as agents for owners of ships to procure purchasers for ships, or ships for intending purchasers, in precisely the same manner as house-agents act in respect of houses. They also act as agents for ship-owners in finding charterers for their ships, or for charterers in finding ships available for charter, and in either case they effect the charterparty (see Affreightment). Chartering brokers are customarily paid by the ship-owner, when the charter-party is effected, whether originally employed by him or by the charterer. Charter-parties effected through brokers often contain a provision—cent, on estimated amount of freight to be paid to A B, broker, on the signing of this charter-party, and the ship to be consigned to him for ship’s business at the port of X [inserting the name of the port where A B carries on business].” The broker cannot sue on the charter-party contract because he is not a party to it, but the insertion of the clause practically prevents his right from being disputed by the ship-owner. When the broker does the ship’s business in port, it is his duty to clear her at the customs and generally to act as “ship’s husband.” A bill-broker was originally an agent who, for a commission, procured for country bankers the discounting of their bills in London. But the practice arose of the broker guaranteeing the London banker or financier ; and finally the brokers ceased to deposit with the London bankers the bills they received, and at the present day a bill-broker, as a rule, buys bills on his own account at a discount, borrows money on his own account and upon his own security at interest, and makes his profit out of the difference between the discount and the interest. When acting thus the bill-broker is not a broker at all, as he deals as principal and does not act as agent. See Story. Commentaries on the Law of Agency. Boston, 1882.—Brodhtjest. Law and Practice of the Stock Exchange.