Commission Agreement Template: Rates, Payment and Terms

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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.

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].

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.

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 Template: Rates, Payment and Terms

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Commission Agreement Template — quick answers

Reviewed July 2026 Free download, PDF & DOCX

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.