Q.An agent is paid ordinary commission at 5% and del credere commission at 2% on the total sales he transacts. During a month he sold goods worth ₹2,00,000, of which ₹50,000 was on credit. Find his total earnings for the month.

The agent who guarantees payment of the sale price by the buyer to the principal is the del credere agent, who receives an additional "del credere" commission for bearing that credit risk.

Each option describes a different intermediary:

• Auctioneer — sells goods by public auction to the highest bidder; gives no payment guarantee.
• Del credere agent — for an extra commission, guarantees the principal that the party (buyer) will pay the sale price; if the buyer defaults, the agent makes good the loss.
• Factor — is given possession of goods and can sell them in his own name, but does not by definition guarantee payment. …

The description given belongs to a del credere agent, who — for an extra commission — guarantees payment by the buyer. A broker only negotiates deals between parties and gives no such guarantee, so the statement is False.

Distinguishing the two agents:

• Broker: an agent who brings the buyer and the seller together and arranges the deal in return for brokerage. A broker does not guarantee that the buyer will pay. …