Sample Sales Commission Agreement Template PDF

Commission Agreement Template

A commission agreement, or a commission sales agreement, is a legally binding contract used between two parties. The first party is generally referred to as the “principal,” and they have goods and services they are looking to sell. The second party is typically referred to as the “agent.” The principal hires the agent to sell such goods for a commission, which is a percentage or other agreed amount for the sale of each service or good. A commission agreement details the relationship between the principal and the agent.

This commission agreement template serves as a go-by that can help assist you in creating your own commission agreement.
A commission agreement is an important agreement that a company should use when hiring a new salesperson.
This commission agreement template is split into easy to follow sections to define the terms of the agreement between the principal and the sales representative.
A commission agreement sets the amount or percentage of commission due to the agent after the sale of goods or services.

Legal Terms Found in a Commission Agreement Simplified Legal terms can be hard to understand. You should be familiar with the terms typically used in a commission agreement. Here are a few to help you form a general understanding of the terms in a commission agreement:

Principal – This party to a commission agreement is the distributor or seller.
Agent – This is the party contracted by the principal (seller) to sell certain goods or services. An agent is a sales representative for the services and products produced by the Principal.

Why is a Commission Agreement Necessary? A commission agreement is necessary for a number of reasons. Providing an agreement between two parties avoids common misunderstandings that the parties may have if they did not clearly discuss the terms of a contract. Oral agreements can easily be forgotten or misconstrued. Implementing a written agreement ensures the parties understand the relationship between the parties and realizes the expectations under the agreement. A written and executed commission agreement is a legal document that protects the principal and agent. A vital element of a commission agreement is the payment structure. The method of payment in this type of agreement is referred to as commission. The commission is the percentage due based upon the sale of the defined services or products listed in the agreement. A commission agreement should be used when a company is hiring a new employee who is to be paid either exclusively or in part on commission. Conversely, if an individual is being hired and the employer has not provided a commission agreement, the commission agreement can be provided to make sure everything is properly documented and agreed upon. The employer should set a “base amount” if necessary if the employee is entitled to a monthly base rate. The employer may also be entitled to a commission on top of a monthly base. Essential Elements in a Commission Agreement. A commission agreement should be detailed and customized to fit a company’s needs. Some of the most important components in a commission agreement include:

Parties to the Agreement: The parties to the contract should be identified. The information should be accurate in the agreement. Both the principal and agent’s contact information should be listed in the agreement as well.
Authorization of Sales: This is a standard provision of a commission agreement that authorizes the agent to identify him or herself as an authorized agent of the principal.
Scope of Sales: The scope of sales defines the agent’s parameters while selling the goods or services.
Sales Region: The sales region defines where the agent is to engage in selling the products and services. This is set by the principal, and the agent agrees not to sell outside of the defined sales region.
Earnings and Commission:This part of the contract spells out the payment terms and commission structure. It also sets a payment schedule for when the agent is to be compensated. This part of the agreement should be as detailed as possible. The way the commission is calculated should also be included to prevent any misunderstandings between the two parties.
Non-Compete Clause: Some commission agreements may bind an agent to a non-compete. A non-compete provision restricts the agent from representing other distributors while under contract with this principal. Some non-competes are stricter than others, depending on the goods and services being sold. Some may restrict an agent from selling similar products within a defined radius, while others may not.
Confidentiality and Property Rights: This binds the parties to protect each other’s confidential information. This extends to proprietary information that is to be kept in confidence at all times.
Dispute Resolution:As with any legal contract, a dispute resolution contract is necessary. This details the parties’ obligation to settle a dispute before seeking legal action.

Common Mistakes and Consequences of not using a Commission Agreement A commission agreement is an important contract in business relations. Some common mistakes to watch out for include:

Misidentifying the Parties
Failing to include a non-compete clause if applicable
Excluding a payment structure, commission rate, base pay, and payment schedule
Not contacting an experienced attorney to review the terms of your commission contract.

How to get your Commission Agreement Signed There are a couple of ways to get your commission agreement signed: in person or online. An electronic signature is legally binding and is one of the most convenient modes of signatures in today’s fast pace world. Adding ApproveMe’s software in your routine business practices simplifies the signing process and improves customer satisfaction while boosting your company’s success. Additional Tools Entrepreneurs face plenty of obstacles when starting up a new business. It can be puzzling when trying to figure out what software is best for your business. Keeping track of your company’s sales is a top priority. Here are a few helpful tools to keep you organized while tracking your company’s progress: Blitz Commissionly Zendesk Sell Pipeline Deals PipeDrive

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COMMISSION AGREEMENT TEMPLATE

THIS Commission Agreement (“Agreement”) is being made between ____________________ (the “Principal”) of _________________________________________________________________and ________________________ (“ the Agent”) of _____________________________________ collectively referred to as “the Parties” and is made effective on this _____ day of ______, 20___. WHEREBY the Principal is involved in the business of ________________. The Agent shall perform the below job duties and desires to sell the below described products: _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ The Agent hereby agrees to sell the above-referenced product(s) for commission. IN CONSIDERATION THEREOF, the Parties agree to the following: SECTION ONE. AUTHORIZATION OF SALES The Agent agrees to identify him or herself as an authorized Agent of the Principal for the sale of the above product(s). SECTION TWO. SCOPE OF SALES The Agent understands and agrees that they will abide by the below scope and parameters while selling the product(s). 2.1 The Principal agrees to deliver any and all promotional items used to acquire sales. Shall the Agent desire to use their own promotional materials; they must first obtain written approval from the Principal. 2.2 The price of the above-referenced products shall be determined and set by the Principal. 2.3 The Principal shall furnish a Sales Agreement template for use by the Agent engaged in all sales of the product(s). SECTION THREE. SALES REGION The Parties understand and agree that the Agent will sell the product(s) in the below region (hereinafter referred to as the “Sales Region”). __________________________________________________________________________________________________________________________________________________________________________Agency agrees not to sell the product(s) outside of the defined Sales Region. SECTION FOUR. NON-COMPETE The Agent understands and agrees not to sell any product(s) for any competitor in direct competition with the Principal within the above Sales Region for ____ years after the termination of this commission agreement. SECTION FIVE. EARNED COMMISSIONS AND PAYMENT STRUCTURE The Parties agree that the authorized Agent shall be compensated in the following fashion (“Commission”): _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ The Principal shall compensate the Agent: ___ Weekly ___ Biweekly ___ Monthly ___Quarterly ___ Other __________________________________________________________________________________________________________________________________________________________________________ The Principal agrees to reimburse the Agent for “out-of-pocket” expenses incurred by the Agency in accordance with the Principal’s policies and procedures. SECTION SIX. DURATION AND TERMINATION This Agreement shall be effective on the date hereof and shall continue until terminated by either Party upon _____ business days written notice. SECTION SEVEN. CONFIDENTIALITY AND PROPERTY RIGHTS Throughout the duration of this Commission Agreement, it may be necessary or the Principal to disclose protected information including, but not limited to, industry and trade secrets, propriety and confidential information to ensure the Agent can succu4ssfully sell the product(s). The Agent is not permitted to share or disclose such confidential information whatsoever without written permission from the Principal. The Principal retains all of its intellectual property rights in and to its Confidential Information. Immediately upon a written request by the Principal at any time, the Agent will turn over to the Principal all Confidential Information of the Principal and all documents or media containing any Confidential Information of the Principal and any and all copies or extracts thereof. Further, the Agent shall promptly return to the Principal all copies, whether in written, electronic, or other form or media, of the Principal’s Confidential Information, or destroy all such copies and certify in writing to the Principal that such Confidential Information has been destroyed. In addition, the Agent shall also destroy all copies of any Notes created by the Agent or its authorized Representatives and certify in writing to the Principal that such copies have been destroyed. SECTION EIGHT. WARRANTIES AND REPRESENTATIONS The Parties to this Agreement fully represent that they are authorized to enter into this Commission Agreement. The obligations and performance of either the Principal or Agent shall not infringe upon or violate the rights of any third party or violate any other agreement between the Principal or Agent, any other individual, business entity, or formal organization, or interfere with any law and or governmental regulation. SECTION NINE. SEVERABILITY In the event any part or provision of this Commission Agreement is deemed unenforceable or invalid, in part or in whole, that part shall be severed from the remainder of the Commission Agreement, and all other parts or provisions shall continue in full force and effect as valid and enforceable. SECTION TEN. WAIVER No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set out in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. SECTION ELEVEN. NO ASSIGNMENT This Agreement shall inure to and be binding upon the undersigned and their respective heirs, representatives, successors and permitted assigns. This Agreement may not be assigned by either Party without the prior written consent of the other Party. SECTION TWELVE. DISPUTE RESOLUTION Parties to this Agreement shall first attempt to settle any dispute through good-faith negotiation. If the dispute cannot be settled between the parties via negotiation, either party may initiate mediation or binding arbitration in the State of ________________. If the parties do not wish to mediate or arbitrate the dispute and litigation is necessary, this Agreement will be interpreted based on the laws of the State of _________________, without regard to the conflict of law provisions of such state. The Parties agree the dispute will be resolved in a court of competent jurisdiction in the State of ______________________. The prevailing Party to the dispute will be able to recover its attorney’s fees and other reasonable costs for a dispute resolved by litigation or binding arbitration. SECTION THIRTEEN. GOVERNING LAW AND JURISDICTION The laws of the State of _______________ shall govern as to the interpretation, validity, and effect of this Agreement. SECTION FOURTEEN. ENTIRE AGREEMENT This Agreement constitutes the sole and entire Agreement of the Parties regarding the subject matter contained herein and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, regarding such subject matter. This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each Party hereto. SECTION FIFTEEN. COUNTERPARTS This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same Agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. SECTION SIXTEEN. ELECTRONIC SIGNATURES This Agreement and related documents entered into in connection with this Agreement are signed when a party’s signature is delivered electronically, and these signatures must be treated in all respects as having the same force and effect as original signatures. SECTION SEVENTEEN. MISCELLANEOUS This Agreement cannot be changed, modified, terminated, canceled, rescinded, or in any other way altered or negated unless the same is in writing and signed by the Party against whom enforcement of the change, modification, discharge, termination, cancellation, or rescission is sought. It is agreed that all understandings and agreements heretofore had between the parties are merged in this Agreement, which alone fully and completely expresses their understanding, and this Agreement has been entered into after full investigation and consideration, neither Party relying upon any statement or representation, not embodied in this Agreement, which may be claimed to have been made by any of the parties hereto. IN WITNESS WHEREOF, the Principal and Agent have executed this Commission Agreement on the day and year first above written. Dated: _____________________________ Dated: _______________________________ ________________________________________ _______________________________________ Principal’s Signature Agent’s Signature ________________________________________ _______________________________________ Principal’s Printed Name Agent’s Printed Name Principal’s Contact Information: Agent’s Contact Information: Address: ______________________________ Address: _____________________________ Phone Number: _________________________ Phone Number: _________________________ Email Address: _________________________ Email Address: _________________________

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Frequently Asked Questions

how to write a sales commission agreement

No need to write a sales commission agreement on your own. You can download one free from Approveme.com. All you need is two things: an email address and a name. After you’ve entered these by clicking the ‘download contract’ button and submitting them in our form, you will be sent an email with the attached contract available for download.

what is commission agreement

A commission agreement is a contract between a company and an employee, where the employee agrees to perform specific tasks for the company in exchange for a predetermined percentage of the income generated through those tasks.
A commission agreement template free is most common with salespeople who are paid on commission.

how do commission sharing agreements work

Commission sharing agreements are an increasingly popular alternative to traditional salaries in the world of work. These agreements allow employees to take home a percentage of the commissions they generate for their company. As businesses increasingly rely on commission-based sales, this is an appealing offer for many workers who would otherwise be paid a salary with no chance of earning additional income.

What is a commission agreement?

A Commission Agreement is a type of document that outlines the terms and conditions that both parties have agreed to in regards to revenue or earnings from a certain project, service, venture, etc. It specifies how much the business will pay the contractor and what percentage of revenue will be allocated for payment. A Commission Sales Agreement template free should include all relevant details such as total cost of goods sold, monthly/yearly payments

What is a commission agreement in real estate?

A commission agreement is a contract between a real estate agent and a seller or buyer that specifies the amount of commission the agent will receive for successfully closing the sale.
Commission agreements in real estate are legal contracts between a property owner and an agent. There are many different types of commission agreements, but the most common one is where the agent earns a percentage of the property's list price.

What does commission mean in business?

For an employee in a commission-based position, they are compensated for their work based on the number of sales they've made. They are also incentivized to sell higher-priced items in order to earn more money. This is not the case for a salaried employee, where the amount of their pay is predetermined and doesn't change based on their performance or productivity. You can always check out our business referral commission agreement template for more information.

What sales commission is fair?

Every sales commission agreement needs to include the details about what types of sale are being incentivized, at what rate, and what type of commission will be paid.
The key to keeping commission agreements fair is to make sure that they are structured in a way that ensures that both parties get enough out of them. Having an established agreement will make sure that the expectations are set upfront, which will help avoid misunderstandings or confusion later on down the line.

What is a Sales Commission Agreement?

A sales commission agreement is a contract between a company and its sales staff which determines the commissions that will be paid. This agreement sets out the terms of the relationship between the company and its salespeople, such as who is eligible for commission, what type of commission is offered, when commissions are to be paid, and whether there are any restrictions on how commissions can be spent.

Who needs a Commission agreement?

A Commission Agreement is an arrangement between the client and the salesperson wherein the client pays a commission for completed work.
A commission agreement can help you to manage your business better, track your performance on a monthly basis, and build credibility among your clients.
A commission agreement is not essential for freelance workers who make onetime payments, but it is essential if you are an entrepreneur who will be doing jobs for multiple clients.
One of the most important aspects of a Commission Agreement is that it must be mutually agreed upon by both parties. You need to clearly communicate this with your clients that you are only working on their project if they sign this document.

How to write a Commission agreement

Approveme.com’s legal professionals have written a commission agreement for you! No need to worry about drafting up all the legal jargon, we’ve taken care of everything. Simply input your name and email, and we will send a service agreement directly to your email. Once downloaded, you can modify the content with your specific company information.

How do I use a Commission Agreement Template?

A commission agreement template is standard contract for two parties, an employee and employer, to agree on the terms of commission earned by the employee. The agreement usually specifies the percentage of commission that will be paid to the salesperson for each sale that they make for their employer.
An employee can create a custom template or download one from our site.

What must a Commission agreement have?

The Commission agreement should be clear and concise. It should state both parties’ obligations and rights under general law, as well as any additional agreements that they may have made between them. This includes any special terms that are not included in general law which apply to their agreement, such as confidentiality obligations relating to specific information shared by both parties.

What should I put in my Commission agreement?

Commission agreements should be clear and straight-forward. It should state the obligations and rights from general law, as well as any additional agreements that have been made between parties in the commission agreement. The terms in the agreement might also include any special conditions which apply to it. For instance, confidentiality obligations may apply depending on the information that has been shared by both parties.

How to make a simple Commission agreement template free

Approveme.com is happy to help! Our legal professionals have written a simple Commission agreement template free just for you. You can download the commission agreement template on this page directly by selecting Download Contract and adding your email.

How long are Commission agreements good for?

Commission agreements can last indefinitely. The length of time will depend on the specific agreement, but the two parties should agree to an end date to avoid any confusion or misunderstanding.

What are some Commission agreement examples?

You can find a commission agreement examples right on this page. Select Download Contract, enter your name and email, and receive a commission agreement examples right in your inbox!

Where can I find a Commission Agreement Sample?

Approveme.com has got you covered! To get a commission agreement sample, you can select the Download Contract button and enter your name and email. Once you do so, you will be sent an email with your downloadable contract, so you can begin protecting your business! At any time, you can log into your account and re-download the contract for use.

Do you offer a sales commission agreement free template?

Approveme.com’s legal professionals have written a sales commission agreement free template for you! No need to worry about drafting up all the legal jargon, we’ve taken care of everything. Simply input your name and email, and we will send a service agreement directly to your email. Once downloaded, you can modify the content with your specific company information.

What is a introducer commission agreement template?

Introducer commission agreements allow a business to incentivize sales representatives by offering a commission for introducing new customers. This agreement can be specific to a product or service, or it can be general, incentivizing the sales representative each time they introduce a new customer. This template can also outline payment terms and conditions, as well as the company's termination policy.