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Let's assume a Principal of a firm had secured a exclusive agreement for a big client to sell for xxxx days. The principal instructs the broker to secure this commission at all costs. The broker does so and spends $x,xxx in an effort to obtain the commission (as instructed). Unfortunately the broker does not land the commission within the exclusive agreement period.
-What typically happens to the money that the broker paid out of pocket under the instruction of his principal? Is this reimbursed or does the broker pay this as overhead?
Now let's assume the broker did complete the deal.
-What would happen to the amount that the broker paid out of pocket in relationship to the broker's agreed upon commission? Would it be part of his commission or is the additional amount reimbursed?
Most brokers are independent contractors so they would eat those dollars.
What if they are not independent contractors? What if they are employed by the firm and their principal instructed them to spend the money on the client?
What if they are not independent contractors? What if they are employed by the firm and their principal instructed them to spend the money on the client?
How would that affect scenario A and B?
What does their employment contract say about expenses?
It's a hypothetical question. I just wanted to see the way the situations are typically addressed in terms of compensation.
The answer is a perfect hypothetical fit.
It is negotiable.
The employment or associate agreement will define expense compensation, regardless of status as employee or independent contractor.
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