Legal Definitions - transaction cost

Definition: A cost associated with a process transaction, such as a broker's commission, the time and effort expended to arrange a deal, or the cost involved in litigating a dispute.

Example: When buying or selling a house, there are transaction costs involved such as real estate agent commissions, legal fees, and appraisal costs. These costs are not included in the price of the house but are necessary expenses to complete the transaction.

Explanation: Transaction costs are the expenses incurred during the process of buying or selling goods or services. These costs are not included in the price of the product or service but are necessary expenses to complete the transaction. The example of buying or selling a house illustrates how transaction costs can add up and impact the overall cost of the transaction.