Commission Sales Agreement – What is it & Do I Need One

Commission Sales Agreement

Commission Sales Agreement

No doubt that it is imperative that your lawyer provides you with a well worded sales commission agreement when you want to work with sales commissions.

Any compensation received under the commission structure can easily be subject to numerous variables and conditions, so it is vital to have the details clearly outlined by an attorney just to avoid any disputes in future.

The commission structure normally vary among employers. For instance, a real estate commission can be just a straight commission that is only a percentage of the actual price. A sales representative for a retail company may also have a totally different agreement, which basically may include basic salary and bonus payouts that increase as sales increase.


The following are some of the factors that the right to commissions can be conditioned on:

  • Developing a proper sales plan.
  • Having the whole sales department meet a particular quota or just meeting an individual sales quota.
  • Having the services or even goods be delivered to and accepted by the client.
  • Continuing employment by the company involved and with a particular department.
  • Acceptable job compliance and performance with employer procedures and policies.


Commission only sales positions can without a doubt be extremely competitive and the average sales commission can greatly vary by position. As a matter of fact, a good number of sales jobs provide compensation that includes a basic salary tagged along with a commission structure and several other incentives.

Disagreements that involve a sales representative commission normally arise when the finer details of an incentive program were not well understood by the salesperson involved. That is why it is important to have a quality sales commission contract sample that contains all the vital terms. Below are some of the questions that you may have to address:

  1. What exactly happens to a commission for a complete sale if the sales individual is terminated or quits?
  2. What exactly happens to a real estate commission if in any case a home owner gets a different real estate agent or opts to sell the property on his or her own?
  3. What happens when the salesperson completes a particular sale and another different sales representative generated the lead? Will there be any splitting of a commission?
  4. What will happen if a client places an order but eventually fails to fully pay or even return the product?  

It is vital to note that the questions above will vary greatly depending on the nature of the sales job, but it is not imperative to think of all the possible scenarios and address all of them in the commission agreement.

With the right incentive program, both the salesperson and the company can easily fetch profits. However, it is important to ensure that all the necessary terms of any commission agreement are written into the right sales commission contract sample form. This will go a long way in ensuring that no misunderstanding and future litigation occur.


Need a Commission Sales Agreement? Contact Sam Mollaei, Esq., business lawyer, via email at [email protected] or via phone (818) 925-0002.

Mollaei Law is a business law firm serving businesses and entrepreneurs. We can help with all of your business needs including tailoring legal documents for your business, reviewing and drafting contracts, negotiating, business planning, setting up business entities, and helping with any of your business transactional forms.

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