Every commodity deal seems to accumulate participants with titles — broker, mandate, sub-agent, "facilitator" — and every one of them expects a cut when the deal closes. Understanding who's actually entitled to what, and why, prevents most of the ugliest disputes in the business.
Broker
Introduces buyer and seller. Earns a commission, typically a percentage of deal value, contingent on the deal actually closing. A broker's authority is limited to making the introduction and facilitating negotiation — they're not authorized to bind either party to terms.
Mandate
Formally authorized, in writing, to represent a buyer's or seller's interests directly. This is a meaningfully different level of trust and authority than a broker who's simply introducing parties — a mandate can negotiate, and sometimes commit, on behalf of the party they represent. Treating a mandate and a broker as interchangeable is a common and expensive mistake.
The sub-broker chain
This is where it gets complicated, and where most disputes start. Broker A introduces the deal to Broker B, who introduces it to the actual seller. Both expect a commission. Add a mandate and a sub-agent, and a single deal can easily have four or five parties expecting a piece of the same transaction.
This is completely normal and legitimate — when it's disclosed and documented. It becomes a problem generator the moment nobody can clearly explain the chain, or agree on the splits, after the deal has already closed.
Why commission disputes are so common
The pattern is almost always the same: an informal, verbal understanding — "we'll sort out percentages later" — made early in the relationship, when everyone's optimistic and nobody wants to be the person who makes the negotiation feel transactional. By the time the deal actually closes, months later, three different people remember three different numbers, and the deal that should be a win turns into a dispute that eats the margin anyway.
What a locked commission structure should actually include
- Named parties. Every recipient, specifically, not "the broker network."
- A percentage or fixed amount, unambiguous, not a range to be negotiated later.
- A clear trigger condition. Paid on SPA signing? On funds received? On delivery confirmed? These are meaningfully different moments.
- Locked before funds move. Not negotiated after the deal has already closed, when everyone's leverage has changed.
Why "we'll figure it out later" never actually gets figured out
Once money is real and sitting in an account, incentives shift immediately. The commission conversation that felt easy to postpone in month one becomes the hardest conversation of the entire deal in month six. Locking the structure early isn't distrust — it's the only way everyone stays aligned once real money is involved.
This is exactly why CommodityOS treats commission structuring as its own explicit step tied to the deal itself — named entries, a locking mechanism, and a record that exists before funds are released, not a verbal understanding reconstructed from memory after the fact.
Nothing ends a good working relationship faster than a five-way commission split with no paperwork behind it.
Looking for other terms? See the full Commodity Trading Glossary.