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Commission Agreement
Define commission structures, payment terms, and responsibilities with this Commission Agreement Template.
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Commission Agreement Template
This Commission Agreement (“Agreement”) is entered into on [Date], by and between:
Company (Principal): [Full Legal Name / Company Name]
Address: [Address]
Contact: [Phone, Email]
Sales Representative (Agent): [Full Legal Name / Company Name]
Address: [Address]
Contact: [Phone, Email]
Together referred to as the “Parties.”
1. Appointment
The Company appoints the Sales Representative as [exclusive/non-exclusive] agent to promote and secure sales of the Company’s products/services in the following territory: [Define Territory].
2. Commission Structure
Commission Rate: [X]% of net sales revenue.
Eligible Sales: Sales must be confirmed, invoiced, and paid in full by customers before commission is due.
Adjustments: Refunds, returns, or cancellations reduce commission accordingly.
3. Payment Terms
Commissions will be paid [monthly/quarterly] within [X] days after receipt of customer payment.
Payments shall be made by [Bank Transfer / Check / Other].
4. Reporting and Records
The Sales Representative shall provide regular reports of sales activity. The Company will maintain accurate records of all transactions and allow inspection upon reasonable notice.
5. Expenses
Unless otherwise agreed, all expenses incurred by the Sales Representative in connection with promoting or selling the Company’s products shall be borne by the Sales Representative.
6. Confidentiality
The Sales Representative agrees not to disclose any confidential information of the Company, including customer lists, pricing, or business strategies.
7. Term and Termination
This Agreement shall commence on [Start Date] and continue until terminated by either Party with [X days] written notice.
Termination shall not affect the obligation to pay commissions earned on completed sales prior to termination.
8. Non-Compete and Non-Solicitation
For the duration of this Agreement and [X months/years] after termination, the Sales Representative shall not directly compete with the Company or solicit its clients without written consent.
9. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of [State/Country].
10. Entire Agreement
This Agreement constitutes the entire understanding between the Parties and supersedes all prior agreements, whether oral or written, relating to the subject matter.
Signatures
Company (Principal): ___________________________ Date: _________
Name/Title: [Full Name, Title]
Sales Representative (Agent): __________________ Date: _________
Name/Title: [Full Name, Title]
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Commission Agreement
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For quick answers, scroll below to see the FAQ.
COMMISSION AGREEMENT FAQ
What is a Commission Agreement?
A Commission Agreement is a legal contract between a company (or principal) and an agent, employee, or contractor who earns payment based on sales or referrals. It specifies commission rates, payment schedules, and responsibilities.
Why is a Commission Agreement important?
It helps prevent misunderstandings by clearly stating how commissions are calculated and when they are paid. It also protects both parties by setting expectations for performance, reporting, and dispute resolution.
When should you use a Commission Agreement?
Use this agreement whenever paying commissions for sales, referrals, or business deals—whether with independent contractors, sales agents, brokers, or employees.
What should a Commission Agreement include?
It should include details of commission structure, calculation method, payment schedule, territory or exclusivity (if any), reporting obligations, termination rights, and governing law.
Does a Commission Agreement guarantee employment?
No, unless specifically stated, commission agreements generally establish an independent contractor or agency relationship rather than permanent employment.
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