A commission agreement refers to a lawful document between a company or an individual and a salesperson or agent which contains the stipulations under which the salesperson or agent is to be compensated in case they generate any sales for the company or secure it any business deals. The real estate, sales, and recruitment sectors use such agreements most commonly.
Key Elements of a Commission Agreement:
Here are the key elements of a standard commission agreement document.
Parties Involved:
Principal
Agent/Salesperson
Commission Structure
Payment Terms
Duties and Responsibilities
Sales Targets and Quotas
Duration of Agreement
Confidentiality and Non-Compete Clauses
Dispute Resolution
Governing Law
Example Scenario:
A technology startup signs a sales agent in a non-exclusive commission-based agreement, where the agent markets the software products developed by the company. The sales agent will earn a 10% commission for all sales. Commissions are to be paid on a monthly basis and the minimum monthly sales target is $10,000. To protect the business’s intellectual property rights, we also have included a confidentiality clause in our contract.
A commission contract ensures there is mutual understanding and transparency between the principal and the agent/salesperson through aligning incentives and defining the terms of the business relationship.
Here are previews and download links for these free agreement templates that I have prepared using MS Word.
