Legal Definitions - del credere

Del credere describes a specific type of agency relationship where an agent takes on an additional, significant financial responsibility beyond their usual duties. In a del credere arrangement, the agent not only facilitates a transaction between their principal (the person or entity they represent) and a third party, but also personally guarantees the financial performance of that third party. This means if the third party fails to pay or fulfill their obligations, the del credere agent becomes personally liable to their principal for the resulting loss. This enhanced responsibility is typically undertaken in exchange for a higher commission or greater compensation.

Here are some examples to illustrate this concept:

• Art Dealer Selling for an Artist: An independent art dealer agrees to sell a sculptor's new collection to various private collectors. The dealer operates on a del credere basis, receiving a higher commission for this arrangement.
  In this situation, the art dealer not only finds buyers for the sculptor's work but also personally guarantees that those buyers will pay for the art. If a collector purchases a sculpture but then fails to make payment, the art dealer is obligated to pay the sculptor the agreed-upon amount, absorbing the financial risk themselves.
• Export Agent for a Manufacturer: A small textile manufacturer wants to expand into international markets but lacks the resources to vet foreign buyers. They hire an export agent on a del credere contract to find overseas distributors.
  Here, the export agent's role extends beyond just connecting the manufacturer with international distributors. The agent takes on the financial risk that the foreign distributors will pay for the textile shipments. Should a distributor default on payment, the export agent is responsible for compensating the textile manufacturer for the lost revenue.
• Specialized Equipment Sales Representative: A company manufacturing high-value industrial machinery employs a sales representative who works on a del credere commission structure. The representative identifies potential clients and negotiates sales contracts.
  Under this arrangement, the sales representative is not just earning a commission for making a sale. They are also guaranteeing the creditworthiness of the clients they bring in. If a client purchases machinery but subsequently defaults on their payment plan, the sales representative is financially liable to the manufacturing company for the unpaid amount, reflecting their enhanced responsibility.