Home > West's Encyclopedia of American Law > Factors

People who are employed by others to sell or purchase goods, who are entrusted with possession of the goods, and who are compensated by either a commission or a fixed salary.

A factor is a type of agent who sells goods owned by another, called a principal. The factor engages more frequently in the sale of merchandise than the purchase of goods. A factor is distinguished from a mere agent in that a factor must have possession of the principal's property, while an agent need not. The factor-principal relationship is created by a contract. Both parties are expected to comply with the terms of the agreement. The contract is terminable by the factor, by the principal, or by operation of law.

The merchandise entrusted to the factor is called a consignment, and a factor is often synonymously called a consignee. The factor is sometimes referred to as a commission merchant when his or her compensation is based on a percentage of the...