World Library  
Flag as Inappropriate
Email this Article

Factor (agent)


Factor (agent)

A factor, Latin for "doer, maker" (from Latin facit, "to do, make"), is a mercantile fiduciary who receives and sells goods on commission (called factorage), transacting business in his own name and not disclosing his principal, and historically with his seat at a factory (trading post). A factor differs from a commission merchant in that a factor takes possession of goods (or documents of title representing goods) on consignment, whereas a commission merchant sells goods not in his possession on the basis of samples.[1] Most modern factor business is in the textile field, but factors are also used to a great extent in the shoe, furniture, hardware, and other industries, and the trade areas in which factors operate have increased.

In the UK, most factors fall within the definition of a mercantile agent under the Factors Act 1889 and therefore have the powers of such.[2] A factor has a possessory lien over the consigned goods that covers any claims against the principal arising out of the factor's activity.[3] A debt factor, be it a person or firm (factoring company), accepts as assignee book debts (accounts receivable) as security for short-term loans; this is known as factoring.


  • History 1
    • Mercantile factors 1.1
    • Colonial factors 1.2
  • Judicial factor 2
  • References 3
  • See also 4
  • Sources 5


Before the 20th century, factors were mercantile intermediaries whose main functions were warehousing and selling consigned goods, accounting to principals for the proceeds, guaranteeing buyers' credit, and sometimes making cash advances to principals prior to the actual sale of the goods. Their services were of particular value in foreign trade, and factors became important figures in the great period of colonial exploration and development.[4]

Mercantile factors

In a relatively large company, there could be a hierarchy, including several grades of factor, such as

The Dutch and British East Indies companies based factors all over Asia. In China and Japan, until each country was opened, trade was limited to two small islands, Dejima In Nagasaki and Shamian Island in Canton (now Guangzhou). In Nagasaki the trading post was referred to as the Dutch Factory and in Canton as the Canton Factories or Thirteen Factories

Colonial factors

In territories without any other 'regular' authorities, especially if in need of defense, the company could mandate its factor to perform the functions of a governor, of course theoretically under authority of a higher echelon, including command of a small garrison, notably Bantam, on the Indonesian island of Java, which was from 1603 to 1682 an English station established by East India Company and run by a series of chief factors.

The term and its compounds are also used to render equivalent positions in other languages, such as:

  • Chief factor for the Dutch oppercommies, for instance of the Dutch West India Company on the Slave Coast of West Africa.
  • Chief factor for the Dutch opperhoofd (literally 'supreme head'; but also used for a Tribal Chief, as a Sachem of American Indians), e.g. in the Dutch factory (trading post) on Deshima (Dejima, or Latinized Decima) Island.

Judicial factor

In Scotland, a judicial factor is a kind of trustee appointed by the Court of Session to administer an estate, for a ward (called a pupil) until a guardian (called a tutor) can be appointed (factor loco tutoris), for a person who is incapax, or for a partnership that is unable to function.


  1. ^ Christine Rossini, English as a Legal Language, 2nd edn. (London: Kluwer Law International, 1998), 103.
  2. ^ W.J. Stewart & Robert Burgess, Collins Dictionary of Law, 2nd edn., s.v. "factor" (Collins, 2001), 163.
  3. ^ Elizabeth A. Martin, ed., Oxford Dictionary of Law, 5th edn., s.v. "factor" (Oxford: Oxford UP, 2003), 196.
  4. ^ Encyclopædia Britannica. "Factoring", Encyclopædia Britannica Ultimate Reference Suite. Chicago: Encyclopædia Britannica, 2012.

See also


  • WorldStatesmen, for Vietnam; see also under other countries

This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.

Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.