Commission

It is the remuneration paid to the consignee by the consignor in consideration of the services rendered by the former in selling the goods consigned.

This commission can be divided into two types :

(a) Ordinary Commission

(b) Special Commission.

 

(a) Ordinary Commission

It is a commission usually paid as a fixed percentage on gross  sale proceeds. The terms commission normally denotes ordinary commission, unless specified otherwise. The consignee is not responsible for any bad debts and he does not guarantee the payment from all those who buy on credit so long as he is getting ordinary commission only.

 

(b) Special Commission

This is the commission which the consignee gets over and above the ordinary commission. It can be sub-divided into two categories :

(i) Over-riding Commission

(ii) Del Credere Commission

 

(i) Over-riding Commission

This is an extra commission allowed over and above the normal commission and is generally offered when the agent is required to put in hard work either in introducing a new product in the market or where he is entrusted with the work of supervising the performance of other agents in a particular area. This commission is also given for sales at prices higher than the price fixed by the consignor.

 

(ii) Del Credere Commission

Usually, all the losses are borne by the consignor. Sometimes the consignor expects that the consignee should also be responsible for recovering the debts and bear the loss on account of bad debts, if any. In order to compensate him for this additional responsibility, he is given some extra commission called ‘Del Credere Commission’. Such commission is calculated on the total sales unless there is a special agreement to the effect that it is to be paid only on the amount of credit sales. Payment of this commission imposes extra liability on the consignee and induces him to deal in a prudent and cautious manner.