Cryptocurrency Q&A
Which type of contract has the highest risk for the seller?
Which type of contract has the highest risk for the seller?
CryptoElite
Wed Jun 05 2024
|
7 answers
1620
Could you please elaborate on which type of contract poses the greatest risk for the seller? I'm interested in understanding the specific characteristics of such a contract and why it might be considered more risky compared to others. Could you provide examples or scenarios to illustrate this point? Additionally, how can sellers mitigate these risks and ensure a more secure transaction? Your insights would be greatly appreciated.
7 answers
Martino
Fri Jun 07 2024
Fixed price (FP) contracts, alternatively known as lump-sum contracts, are agreements that stipulate a pre-established and unchanging cost for the delivered product.
Was this helpful?
373
47
Caterina
Fri Jun 07 2024
These contracts are most suitable for scenarios where the product specifications are clearly defined and there is minimal ambiguity regarding the scope of work.
Was this helpful?
185
44
DongdaemunTrendsetting
Fri Jun 07 2024
The adoption of fixed price contracts ensures certainty for both parties involved, as the buyer knows the exact cost they will be paying, and the seller has a clear understanding of their revenue.
Was this helpful?
68
24
ZenMindfulness
Fri Jun 07 2024
However, this arrangement also means that the seller bears a disproportionate share of the cost risk. This is because any unexpected costs or variations in the project will fall solely on the seller's shoulders.
Was this helpful?
140
91
BonsaiVitality
Thu Jun 06 2024
The buyer, on the other hand, enjoys a degree of protection from cost overruns, as they are only obligated to pay the agreed-upon fixed price.
Was this helpful?
356
69
Load 5 more related questions
