Jamal Awil

← The Social Control of Impersonal Trust

Principals can place contractual limitations on agent performance. [fact]

Principals can place contractual limitations on agent performance; for example, they can ask auto mechanics to return the parts they replaced or require stockbrokers to consult with them before they trade their portfolio. But many principals hire a mechanic because they have not the faintest idea whether the parts are in working order and a stockbroker because they do not know when it is best to buy, sell, or hold on to their securities. It is precisely because principals are incapable of contractual specification that many of them enter agency relationships in the first place.

Shapiro, Susan P., The Social Control of Imper…, loc. 48