A situation in which one party makes a contractual agreement with a second party in the expectation that the second party will act on its behalf is known as:

Question

A situation in which one party makes a contractual agreement with a second party in the expectation that the second party will act on its behalf is known as:​

Quizplus · Accepted Answer

The situation described is known as a principal-agent problem. This occurs when a principal hires an agent to act on their behalf, but the agent may have conflicting interests or incentives that do not align with those of the principal. This can result in the agent acting against the best interests of the principal.

A Situation in Which One Party Makes a Contractual Agreement