What is it?
Intermediary is a contractual role that governs the flow of information, goods, or payments between principal parties.
intermediary
UCC / CommercialLegal glossary term
Quick answer
INTERMEDIARY usually means a third‑party that connects two contracting sides. In contracts, it matters because the intermediary’s misrepresentation can void the deal or shift liability. Before signing, check the scope of authority and any fee provisions.
Definitions
What is intermediary?
Legal Definition
An intermediary is a third‑party that facilitates a transaction or communication between two primary parties, often for a fee. It creates a duty to act in good faith and may trigger liability if it misrepresents material facts. The most critical qualifier is whether the intermediary is deemed a “dealer” under the UCC, which can affect warranty obligations.
Plain-English Translation
Think of a hallway pass that lets a kid deliver a note between two friends; the pass holder must deliver it correctly or faces trouble.
Contract relevance
Why intermediary matters in contracts
Misusing the intermediary clause can void the contract or impose unexpected liability on the facilitator, and the facilitator bears that risk.
Document context
Where intermediary appears in documents
| Document type | Section | Why it matters |
|---|---|---|
| Brokerage agreement | Recitals | Identifies the intermediary and purpose |
| UCC §2‑207 amendment clause | Integration clause | Determines if the intermediary’s terms survive conflict |
| ISDA Master Agreement | Section 2(b) | Governs the role of credit support providers |
| Commercial loan facility | Schedule of Parties | Lists the loan broker and fee schedule |
Contract language
Common contract wording
| Contract wording | Plain-English meaning | What to check |
|---|---|---|
| "The Intermediary shall act as a conduit between Buyer and Seller" | Intermediary connects parties | Verify who can bind whom |
| "Intermediary shall receive a commission of 2% of the transaction value" | Fee payable to intermediary | Confirm calculation method |
| "All representations made by the Intermediary are deemed warranties" | Intermediary’s statements are guarantees | Check for indemnification language |
Red flags
Red flags to watch for
Wording examples
Clearer wording examples
Vague wording
"Reasonable care"
Clearer wording
"Intermediary must deliver accurate information within 48 hours of receipt"
Vague wording
"May act for either party"
Clearer wording
"Intermediary may act only for the Buyer, unless the Seller provides a written waiver"
Note: “clearer” means easier to read — not legally reviewed or guaranteed safe.
Pre-signature checklist
What to check before signing
1
Confirm the intermediary’s exact scope of authority
2
Identify which party’s warranties the intermediary must honor
3
Review fee calculation and payment schedule
4
Look for liability caps or indemnity clauses
5
Check for termination rights specific to intermediary performance
6
Ensure compliance with any licensing requirements
7
Verify that the intermediary is not classified as a dealer under the UCC
Party impact
How intermediary affects each party
| Party | What this party should check |
|---|---|
| Buyer | Must ensure intermediary’s representations are accurate before reliance |
| Seller | Should limit exposure to intermediary’s warranties |
| Broker | Needs clear commission terms and liability limits |
Comparison
intermediary vs similar terms
| Related term | Plain meaning | Main difference from intermediary |
|---|---|---|
| Agent | Authorized to act on principal’s behalf | Intermediary may not have authority to bind |
| Broker | Facilitates a deal for a fee | Intermediary can also convey information without fee |
| Dealer | Holds inventory and provides warranties | Intermediary usually does not hold inventory |
Missing or vague
If intermediary is missing or vague
If the contract omits a clear definition of the intermediary, parties may argue over who can sign documents. Disputes arise when the intermediary makes a misstatement, leaving the buyer unsure who is liable. The seller might claim the intermediary’s warranty does not apply, leading to costly litigation. Ambiguity can also trigger regulatory scrutiny if the intermediary is deemed a dealer without proper licensing.
Document map
Document section map
| Contract section | What to inspect |
|---|---|
| Definitions | Look for a precise definition of ‘intermediary’ |
| Fees | Inspect commission rate and payment triggers |
| Representations | Verify warranties attached to intermediary’s statements |
| Liability | Identify caps, indemnities, and insurance requirements |
| Termination | Note any rights to end the relationship for non‑performance |
Visual model
Understand intermediary fast
An explainer image has not been generated for this term yet.
01
Landlord hires a leasing agent to find a tenant; the agent collects applications and receives a commission upon lease execution.
02
Borrower engages a loan broker to secure a commercial loan; the broker submits the loan package and earns a fee once the lender funds the loan.
03
Franchisor uses a franchise consultant to recruit franchisees; the consultant receives a signing bonus after each franchise agreement is signed.
Document context
How intermediary shows up in legal documents
Why does it matter?
Misusing the intermediary clause can void the contract or impose unexpected liability on the facilitator, and the facilitator bears that risk.
When does it matter?
When a party hires a broker to negotiate a purchase price, the intermediary clause becomes effective at the moment the brokerage agreement is executed.
Where is it usually seen?
Standard in UCC §2‑207 contract clauses, commercial loan agreements, and ISDA master agreements for derivatives.
Who is affected?
The broker gains the right to commission; the seller risks reliance on inaccurate representations; the buyer may be bound by the broker’s warranties.
How does it work?
First, the principal parties sign a brokerage agreement that defines the intermediary’s scope. Then the intermediary introduces the counter‑party and negotiates terms. Within ten days of closing, the intermediary must provide a written certification of accuracy.
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Wikipedia
Intermediary
An intermediary, also known as a middleman or go-between, is defined in various ways, according to context. In law or diplomacy, an intermediary is a third party who offers intermediation services between two parties. In trade or barter, an intermediary acts...
Open on Wikipedia →Knowledge graph
Where intermediary connects to real contract work
This layer links the term to nearby glossary entries, document use cases, and contract-risk guides so readers can move from definition to context without dead ends.
Glossary
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Source & disclosure
This page is an AI-assisted plain-English explanation based on LexPredict Legal Dictionary context and contract-review patterns. It is not legal advice. Meaning may vary by jurisdiction, industry, and exact clause wording.
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