Contingency Payment

Posted in Marketing and Strategy Terms, Total Reads: 469
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Definition: Contingency Payment

Contingent Payment is a type of payment in which the payer pays the amount due only after the completion of an event, satisfactory delivery of good/services or fulfilment of a contract by the payee.


Sometimes companies base the commission to be paid to agents based on the amount of business they bring in. Consulting companies like SourceOne provides contingency based sourcing services to its client where they say –“No fees unless savings are realized”.

 

In some instances both the payer and the payee party may enter into a contract which details out the contingency conditions.

 

The contract include details like amount of payment, if the amount is not fixed like in case of payment to a lawyer if the client wins the case is based on the amount the client wins then it includes the percentage of the winning amount that the client is liable to pay on winning, it can include condition of how to deal if the payer backs out, or other such disputes that might arise like timeline for payment, penalty for late payment or defaulting on a payment etc.


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