Risk-based contract Sample Clauses

A risk-based contract is an agreement in which the parties allocate financial or operational risk based on the achievement of specific outcomes or performance metrics. Typically, these contracts are used in industries like healthcare or construction, where payment or penalties are tied to the results delivered rather than just the services provided. By linking compensation to measurable results, risk-based contracts incentivize higher performance and help ensure that both parties share in the risks and rewards of the project, ultimately promoting accountability and better alignment of interests.