Legal Definitions - broker

A broker is a professional individual or company that acts as a neutral go-between, connecting buyers and sellers to facilitate a transaction. Their primary role is to arrange agreements or contracts between these parties. For their services, brokers typically earn a fee, often called a commission, which is usually a percentage of the transaction's value.

Unlike an agent who might represent one party exclusively, a broker generally maintains an independent position, working to bring both sides together to complete a deal. Many types of brokers operate in various industries, and they are often required to be licensed and adhere to specific regulations, including a duty to act in the best interests of their clients.

• Example 1: Yacht Broker

  Imagine someone wants to sell their large, luxury yacht, and another person is actively looking to purchase one. A yacht broker would step in to connect these two individuals. The broker would market the yacht, arrange viewings for potential buyers, help negotiate the sale price and terms, and assist with all the necessary paperwork to finalize the transaction. The yacht broker earns a commission once the sale is successfully completed.

  This illustrates the term because the yacht broker acts as the independent intermediary, bringing the yacht's seller and buyer together to arrange the sale contract, earning a fee for facilitating this complex asset transaction.

• Example 2: Business Broker

  Consider Sarah, who owns a successful local bakery and decides it's time to retire, wanting to sell her established business. David, an entrepreneur, is looking to acquire an existing business rather than start one from scratch. A business broker would assist Sarah in valuing her bakery, confidentially market it to potential buyers like David, facilitate negotiations over the sale price and assets, and guide both parties through the legal and financial aspects of transferring business ownership.

  Here, the business broker serves as the independent party connecting Sarah (the seller of the business) and David (the buyer) to arrange the contract for the sale of the entire enterprise, earning a commission for their specialized expertise in facilitating this intricate deal.

• Example 3: Freight Broker

  Suppose a manufacturing company needs to ship a large quantity of goods from its factory to a distribution center across the country, and a trucking company has available trucks and drivers but isn't directly connected to the manufacturer. A freight broker steps in to find suitable trucking companies (carriers) for the manufacturing company (shipper). They negotiate shipping rates, coordinate logistics, and ensure the goods are transported efficiently and on time. The freight broker earns a fee for arranging this transportation contract.

  This example demonstrates a broker's role as the freight broker acts as the intermediary between the shipper (the buyer of transportation services) and the carrier (the seller of transportation services), arranging the contract for moving goods and earning a commission for their coordination efforts.