Section I., s.s. 1. The expression mercantile agent shall mean a mercantile agent having in the customary course of his business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods;
2. A person shall be deemed to be in possession of goods or of the documents or title to goods when the goods or documents are in his actual custody or are held by any other person subject to his control or for him on his behalf.
4. The expression “document of title” shall include any bill of lading, dock warrant, warehouse keeper’s certificate, and warrant or order for the delivery of goods, and any other document used in the ordinary course of business as proof of the possession or control of goods, or authorizing or purporting to authorize, either by indorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented.
Section II., s.s. 1. Where a mercantile agent is, with the consent of the owner, in possession of goods or of the documents or title to goods, any sale, pledge or other disposition of the goods made by him when acting in the ordinary course of business of a mercantile agent shall, subject to the provisions of this act, be as valid as if he were expressly authorized by the owner of the goods to make the same; provided that the person taking under the disposition acts in good faith, and has not at the time of the disposition notice that the person making the disposition has not authority to make the same.
2. Where a mercantile agent has, with the consent of the owner, been in possession of goods or of the documents of title to goods, any sale, pledge or other disposition which would have been valid if the consent had continued shall be valid notwithstanding the determination of the consent; provided that the person taking under the disposition has not at the time thereof notice that the consent has been determined.
3. Where a mercantile agent has obtained possession of any documents of title to goods by reason of his being or having been, with the consent of the owner, in possession of the goods represented thereby, or of any other documents of title to the goods, his possession of the first-mentioned documents shall, for the purposes of the act, be deemed to be with the consent of the owner.
III. Enforcement of Contracts
1. Where a factor makes a contract in the name of his principal and himself signs as agent only, he drops out as soon as the contract is made, and the principal and third party alone can sue or be sued upon it. As factors usually contract in their own name this is not a common case. It is characteristic of brokers rather than of factors.
2. Where a factor makes a contract for the principal without disclosing his principal’s name, the third party may, on discovering the principal, elect whether he will treat the factor or his principal as the party to the contract; provided that if the factor contract expressly as factor, so as to exclude the idea that he is personally responsible, he will not be liable. The principal may sue upon the contract, so also may the factor, unless the principal first intervene.
3. Where a factor makes a contract in his own name without disclosing the existence of his principal, the third party may, on discovering the existence of the principal, elect whether he will sue the factor or the principal. Either principal or factor may sue the third party upon the contract. But if the factor has been permitted by the principal to hold himself out as the principal, and the person dealing with the factor has believed that the factor was the principal and has acted on that belief before ascertaining his mistake, then in an action by the principal the third party may set up any defences he would have had against the factor if the factor had brought the action on his own account as principal.