Commission (Sales) Agreement Template

• Principal: This is the owner of the property, goods, or services and who is hiring the representative to sell on their behalf.
• Representative: This is the broker contracted to promote and sell the offerings on behalf of the principal.

Outlines the representative’s role and whether they are the only party allowed to do the selling. If non-exclusive, other representatives can also sell on behalf of the principal.

The commission is the payment to the representative when sales have been finalized. It is commonly a percentage of the total sales amount to encourage the representative to sell as much as possible.

The term is the length of the agreement. For some industry types, such as real estate in California, a commission agreement cannot be for more than two years.^[9]

To terminate, the parties can either agree to have the relationship end on a specific date or with notice of termination.

• Principal’s Obligations:
  • Accurate Information: To provide accurate details about the offerings being sold by the representative.
  • Fulfillment: To fulfill any orders, deliveries, or the process of changing ownership promptly to the buyer procured by the representative.
  • Payment of Commission: To pay the representative under the terms of the commission agreement.
• Representative’s Obligations:
  • Good Faith: To promote, market, and sell the principal’s offerings to the best of their abilities and in an ethical manner.
  • Adhering to Laws: Ensuring the representative complies with all local laws when promoting the principal’s offerings.
  • Confidentiality: Protecting any proprietary information given by the principal to avoid sharing any sensitive data.

Include a clause or language in the agreement that makes it known that the representative is an independent contractor.