human capital contracts are characterized by an initial investment amount by the capital provider, followed by a series of periodic dividend payments made from the receiver of the capital to the provider. these payments are variable in amount, proportional with the capital receiver's income, and may never total the initial investment amount made the capital provider. in contrast, a loan is a form of debt, characterized by interest payments based on a fixed principal amount, where the repayment of the principal is a necessary condition of the loan.