Final answer:
The term 'commission' is commonly associated with an agent's compensation for fulfilling the duties of an agency through sales or transactions. Commissions are usually a percentage of the sale price, aligning the agent's interests with their principal. Other forms of compensation include salary, bonuses, and referral fees.
Step-by-step explanation:
An agent’s compensation for performing the duties of the agency can be various forms such as a commission, salary, bonus, or referral fee. However, the term “commission” is commonly used to describe the compensation that an agent receives specifically for the completion of a sale or transaction under the terms of an agency relationship.
For example, a real estate agent typically earns a commission for successfully completing the sale of a property. A commission is a percentage of the sale price, so the agent's income is directly tied to the value of the transactions they complete. This form of compensation aligns the agent's interest with that of their principal (the person or entity for whom they are acting).
In contrast, a salary is a fixed payment paid to an employee at regular intervals, a bonus is typically a one-time payment for achieving specific targets or milestones, and a referral fee is a fee paid to someone for referring a new client or customer.