Under which condition must a principal compensate an agent?

The requirement for a principal to compensate an agent is fundamentally based on the terms of the agency contract. When the contract explicitly states that the principal is obligated to pay the agent for their services, that becomes the legally enforceable agreement that dictates the nature of the compensation.

This arrangement recognizes the value the agent brings to the principal through their efforts, skills, and resources dedicated to fulfilling the agency purpose. If a specified amount or method of payment is outlined in the agency agreement, the principal has a definitive obligation to compensate the agent accordingly, irrespective of other factors such as task completion or requests made by the agent.

While agents may sometimes receive commissions or fees upon completing certain tasks, or they may request compensation, these scenarios do not alter the underlying principle of contractual obligations that are established in the agency relationship. Thus, unless there is a contract in place mandating compensation, the principal may not have any liability to pay the agent for unrequested or unspecified services. This makes the stipulation of compensation in the agency contract a critical factor in establishing the principal's obligation.