Client Solvency and Del Credere -Liability
In general, it is beneficial for the principal to require the agent to verify the clients’ solvency prior to forwarding client orders to the principal.
It is also possible to agree in an agency agreement that the agent assumes liability towards the principal for a third party’s ability to fulfill the payment and other obligations arising from the contract. Such an obligation must be agreed upon in writing in order for it to be valid. In such cases, the agent is liable for the client’s obligations as such obligations were the agent’s own. Such liability is referred to as del credere –liability. Unless otherwise set forth in the agreement, the agent is entitled to reasonable additional commission for such obligation.