Question

What action is necessary for a licensor to ensure relatively minimal risk when contracting with a​ licensee?

a) Implement strong legal clauses in the contract.
b) Conduct thorough due diligence on the licensee.
c) Maintain regular communication and oversight.
d) Enforce stringent financial penalties for breaches.

Answer 1

To ensure minimal risk when contracting with a licensee, the licensor should implement strong legal clauses, conduct due diligence on the licensee, and maintain regular communication and oversight.

Step-by-step explanation:

To ensure relatively minimal risk when contracting with a licensee, the licensor should take several actions:

1. Implement strong legal clauses in the contract to clarify the rights and responsibilities of both parties and protect the licensor's interests.
2. Conduct thorough due diligence on the licensee to assess their financial stability, reputation, and ability to fulfill the contract obligations. This can involve checking their financial statements, references, and track record.
3. Maintain regular communication and oversight with the licensee to ensure they are complying with the terms of the contract and address any potential issues in a timely manner.