Commission Sales Agreement: A Step-by-Step Guide

Commission Sales Agreement

If you’re looking to get a Commission Sales Agreement drafted, you’re on the right page…

Commission Sales Agreement outlines the employment terms and compensation so both employers and employees know what to expect going forward.

If you’re looking to get your Commission Sales Agreement drafted or reviewed, email me at

You can use a Commission Agreement document if:

  • You’re hiring a new employee who will be paid in whole or in part on commission and wish to set down everyone’s rights and obligations
    You’re being hired and you want to make sure everyone’s rights and obligations are documented if your employer hasn’t provided a written Commission Agreement
  • No doubt that it’s important that your contract 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 the future.

The commission structure normally varies 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 completed sale if the sales individual is terminated or quits?
  2. What exactly happens to a real estate commission if in any case a homeowner 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.


What To Do Next

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