Definition
The compensation paid to a factor for services rendered on behalf of a principal. Factorage is the fee — typically calculated as a percentage of the transaction value — earned by a factor who buys, sells, or otherwise manages goods or commercial transactions on another's behalf. The term is functionally synonymous with commission in most commercial and legal usage, though it specifically names the compensation arising from the factor-principal relationship rather than agency relationships more broadly.
Wiktionary also notes a secondary meaning — the business or trade of a factor — but this usage is rare in legal contexts and the primary legal meaning is consistently the compensation itself.
Common Language
Modern common usage (Wiktionary): The commission paid to a factor; the business of a factor.
Historical common usage (Webster's 1913): The allowance given to a factor, as a compensation for his services; called also a commission.
The common and legal meanings of factorage align closely enough that no significant interpretive gap exists. The Webster's definition is essentially the legal definition in plain dress. Researchers should note, however, that in ordinary commercial speech the word has largely fallen out of use, replaced by commission, factoring fee, or service charge. Encountering factorage in a historical document signals a formal legal or mercantile context and specifically implies the factor-principal relationship, not generic agency compensation.
Common Confusion
Factorage is sometimes conflated with factoring, but these are distinct concepts. Factorage is the compensation paid to a factor. Factoring (in modern commercial usage) is the financial transaction by which a business sells its accounts receivable to a third party at a discount — a practice that shares historical roots with the factor's role but has evolved into a discrete area of finance law with its own regulatory framework. A historical document using factorage means compensation; a modern document using factoring almost certainly means receivables financing.
Factorage should also not be confused with storage (the charge for warehousing goods), though factors sometimes held goods in addition to selling them, and historical accounts may combine both fees under a single arrangement.
Why It Matters in Research
Factorage appears frequently in nineteenth-century commercial law treatises, mercantile court records, and agency law materials. Researchers working in that corpus should note several practical points.
First, the term is period-sensitive. Factorage as active legal vocabulary belongs primarily to the eighteenth and nineteenth centuries. By the late nineteenth century, commission was the dominant usage, and factorage had retreated to treatise cross-references and older statutory language. If you encounter factorage in a document, it is a reliable marker of older source material or deliberate archaism.
Second, the rate and calculation of factorage was a live legal issue in this period, with disputes arising over whether a factor had earned the full commission, whether factorage was owed on transactions the factor did not complete, and whether unauthorized acts by the factor forfeited the compensation. These disputes appear under factorage, commission, and factor in historical indices — researchers should search all three.
Third, factorage intersects with lien rights. A factor's right to retain goods against unpaid factorage was a recognized possessory lien, and the scope of that lien generated considerable litigation. The connection between factorage owed and lien enforceability is a significant corpus thread.
Fourth, in international and colonial trade records, factorage sometimes appears in combination with primage, freight charges, and storage fees as a line item in accounts of sale. Researchers analyzing historical commercial accounts should be alert to how these charges are bundled or separated.
Historical Dictionary Support
The four source dictionaries are in complete agreement on the core definition: factorage is the allowance or commission paid to a factor by the principal. Black's and Burrill both cite Russell on Factors as authority and note Tomlins as a secondary source. Bouvier and Burrill both observe that commissions is the more common term, which is historically accurate and useful — it explains why the term retreats from legal usage without disappearing from treatise indexes.
Rapalje & Lawrence adds the modest variation of wages, commission or allowance, which reflects the reality that in some arrangements the factor received a fixed fee rather than a percentage, though percentage-based commission was the more common structure in mercantile practice.
None of the historical dictionaries address the modern receivables-financing sense of factoring, which post-dates them. This is an important gap for researchers who may find historical discussions of factors and factorage and incorrectly import modern factoring-law concepts into the analysis.
Jurisdictional Note
Factorage as a distinct legal term appears most prominently in English and American common law jurisdictions following mercantile law traditions. Civil law jurisdictions used comparable concepts under different nomenclature (commission, courtage, Provision in German commercial law). Researchers working in Louisiana or Quebec sources should be alert to civilian vocabulary that covers the same economic ground without using the term factorage.
Encyclopedia Cross-Reference
See Law Mind Encyclopedia: FACTOR (agency and commercial law); COMMISSION (compensation in agency relationships); FACTORING (modern receivables finance).