Overview of Commission Agreement

 

What is this document?

This document establishes the commission terms and structure between a company and its employee or contractor.

 

When would I use this document?

This document can be used when a company hires someone to promote the company or the company’s products and services. This document outlines the conditions for earning a commission and the rate of commission the individual will be paid. This agreement can contain multiple commission structures based on various situations and the revenue that the salesperson is able to generate on behalf of the company.

 

Who signs this document?

This document is signed by the company and the employee or contractor who is being hired.

 

More details about this document

This agreement will set out the commission structure and what targets must be met to earn the commission. Part of this structure will include a definition of which leads will ‘qualify’ for commission. The agreement may also deal with situations where more than one salesperson targets the same lead.

The agreement may specify a geographic area within which the salesperson may generate leads.

This type of agreement will often contain clauses dealing with confidentiality of customer lists and leads, as well as non-solicitation and non-competition clauses. The company will want to include a clause which provides that all leads are the ‘property’ of the company.

 

What are the core elements of this document?

The core elements of a Commission Agreement include: Qualified Leads, Commission, Definition of Confidential Information, and Termination.

Additional clauses may include: Relationship of the Parties, Payment period, Term, Assignment, Audits, and Dispute Resolution.

 

Related Documents

Contractor/Consulting/Services Agreement – this type of agreement can have various names, and is used when a person is paid to provide services but is not hired as an employee. Payment can be flexible eg. money, shares or some other form of compensation.

Nondisclosure/Confidentiality Agreement – an agreement that protects confidential information

Workplace Harassment Policy – this policy deals with harassment in the workplace

Romantic Relations in the Workplace Policy – this policy deals with romantic relations in the workplace

Employment Agreement – an agreement that sets out the terms of an employment relationship

Drug and Alcohol Policy – this policy deals with drug and alcohol use in the workplace and the procedures to follow if unauthorized use is suspected

 

–  –  –

This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.