Sec. 42. General Rule

The general rule is that an agent has no responsibility for defaults of the third person upon the contract executed by the agent.

An agent is merely an intermediary. He forms the contract for the principal, but is not himself a party thereto. His office is to represent the principal in the contractual relationships, and that done, his office is fulfilled. He does not undertake with his principal that the person with whom he contracts for his principal will perform the contract. If he is appointed to sell goods for John Smith to William Jones on credit, he is not answerable if William Jones does not pay the debt. This principle is, of course, ordinarily understood and acted upon in the commercial world, and hardly needs comment. Its statement, however, serves as an introduction to the situation discussed in the following section in which the agent affirmatively assumes such a liability.

54. First National Bank v. Sprague, 14 L. R. A. 498 (Nebr.), discussing the rule pro and con and reviewing the authorities.

Sec. 43. Del Credere Agencies

A del credere agent is one who undertakes (usually for a special consideration) to pay the principal the accounts arising out of the agency if the customer fails to do so. It is deemed a direct obligation, and the agent is immediately liable upon the expiration of the period of credit, and is not an obligation covered by the statute of frauds.

A del credere agent undertakes that he will be responsible to the principal for the price of goods sold by him. This is an unusual undertaking and not one that is incidental to the relationship and therefore must be positively entered into, though inferrable if facts warrant.55

The agent is liable upon this undertaking at the end of the period of credit. It is not necessary that the principal first resort to the debtor.56 It has also been decided that the obligation of the agent is a direct, primary obligation, and not "a promise to answer for the debts of another" within the meaning of the statute of frauds, therefore is enforceable although there is only oral evidence to prove it.57

55. Shaw v. Woodcock, 7 B. & C. 73.

56. Balderson v. National Rubber Co., 18 R. I. 388.

57. Wolff v. Koppel, 2 Denio (N. Y.) 688.