Kaldor-Hicks applied to the Client Compensation Clause

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The book critiques the Client Compensation Clause as a flawed incentive mechanism that disrupts the economic functions of agency contracts. It argues that this clause, unique to agency agreements, distorts preferences and utility maximization for both parties. While theoretically aimed at enhancing efficiency and benefiting disadvantaged parties, the author demonstrates that forced compensation leads to increased transaction costs and overall social detriment, countering its intended benefits.