If a principal and agent enter into a fixed-fee contract where the agent is paid a fixed wage,
A)the principal bears all the risk.
B)the agent bears all the risk.
C)the principal and agent share the risk.
D)Unable to determine with the information given.

Question

Quizplus · Accepted Answer

In a fixed-fee contract, the agent receives a fixed wage regardless of the outcome of their actions, meaning the principal bears the financial risk of the venture since the agent's compensation does not vary with performance.

If a Principal and Agent Enter into a Fixed-Fee Contract