If a principal and agent enter into a fixed-fee contract where the agent pays the principal a licensing fee,
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 where the agent pays the principal a licensing fee, the agent bears all the risk. This is because the agent's income depends on the performance of the business or product, while the principal secures a guaranteed payment regardless of the outcome.

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