Both Direct and the Step-Down Method Can Provide Relevant Information

question 118

True/False

Both direct and the step-down method can provide relevant information for outsourcing decisions.

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Definitions:

Unidentified Principal

An unidentified principal occurs in agency relationships when the third party interacting with the agent does not know the identity of the principal for whom the agent is acting.

Disclosed Principal

A principal whose identity is made known by the agent to the third party at the time of entering into a contract with the third party.

Undisclosed Principal

A party in a contract whose identity is unknown to the third party with whom the agent interacts, during the transaction.

Contractual Liability

The obligation a party undertakes when entering into a contract, making them legally responsible for fulfilling the terms of the agreement.