• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Legal Templates

Legal Templates
  • Business Forms
    Business & Contracts

    All of our legal contracts and documents are drafted and regularly updated by attorneys licensed in their respective jurisdictions, paralegals, or subject matter experts. Save your hard-earned money and time with Legal Templates.

    Top Business Forms
    Business Formation
    • Business Plan
    • LLC Operating Agreement
    • Articles of Incorporation
    • Corporate Bylaws
    • Buy-Sell Agreement
    Business Operations
    • Business Contract
    • Partnership Agreement
    • Non-Disclosure Agreement
    • Release of Liability
    • Letter of Intent
    Service Contracts
    • Purchase Agreement
    • Sales Agreement
    • Invoice
    • Purchase Order
    • Business Purchase
    Employment
    • Employment Contract
    • Employment Offer
    • Employment Verification
    • Freelance Contract
    • Non-Compete Agreement
    View All Business Forms
  • Real Estate Forms
    Real Estate

    All of our legal contracts and documents are drafted and regularly updated by attorneys licensed in their respective jurisdictions, paralegals, or subject matter experts. Save your hard-earned money and time with Legal Templates.

    Top Real Estate Forms
    Landlords
    • Lease Agreement
    • Property Management
    • Eviction Notice
    • Late Rent Notice
    • Lease Termination
    Tenants
    • Room Rental
    • Sublease Agreement
    • Roommate Agreement
    • Notice to Vacate
    • Early Lease Termination
    Home Ownership
    • Real Estate Purchase Agreement
    • Mortgage Deed
    • Quitclaim Deed
    • Deed of Trust
    • Moving Checklist
    View all Real Estate Forms
  • Personal & Family Forms
    Personal and Family

    All of our legal contracts and documents are drafted and regularly updated by attorneys licensed in their respective jurisdictions, paralegals, or subject matter experts. Save your hard-earned money and time with Legal Templates.

    Top Personal and Family Forms
    Estate Planning
    • Power of Attorney
    • Last Will & Testament
    • Living Will
    • Advance Directive
    • DNR Form
    Personal Finance
    • Bill of Sale
    • Loan Agreement
    • Purchase Agreement
    • Promissory Note
    • Sales Agreement
    Family Matters
    • Parenting Plan
    • Child Travel Consent
    • Divorce Agreement
    • Separation Agreement
    • Prenuptial Agreement
    Affidavits
    • General Affidavit
    • Gift Affidavit
    • Affidavit of Identity
    • Affidavit of Residence
    • Affidavit of Death
    View All Personal Forms
  • Support
    Resources
    • Business
    • Real Estate
    • Personal and Family
    • Financial
    • Estate Planning
    Support
    • About Us
    • Careers
    • Contact Us
    • All Legal Documents

    Monday - Friday | 9AM - 7PM EDT

    (855) 335-9779

  • Sign In
  • :email

Home Business Commission Agreement

Commission Agreement Template

Detail the terms and conditions of commission-based compensation with a Commission Agreement.

Published May 3, 2023 | Legally reviewed by Brooke Davis

A commission agreement is an essential document for employers and employees who work on commissions. The commission sales agreement lays out the terms of when commissions are paid, how much, and for what.

Using a sales commission agreement template is a practical way to create your own. The commission agreement template takes you step-by-step through the information necessary to complete the agreement accurately.

Having a commission agreement template in place is a wise choice, especially for organizations with large sales teams who work on a commission basis.

Table of Contents
  • What is a Commission Agreement?
  • When to Use a Commission Agreement
  • What to Include in a Commission Agreement?
  • Commission Agreement Best Practices
  • Commission Agreement Sample

What is a Commission Agreement?

A commission agreement often called a sales commission agreement, is legally binding. It spells out what types of sales and customers are eligible for commissions.

It’s an effective tool that ensures sales staff and employers understand the commission terms. It can be used with all types of employees, whether salaried, paid by the hour, or earned income solely on commissions.

The terms may vary based on the commission, business, and employee type. However, if applicable, the most common elements to include in the agreement are the commission percentages or salary. It may also include terms about confidentiality or non-disclosure related to any deals covered by the commission agreement.

When to Use a Commission Agreement

Using a commission agreement is a smart move whenever there’s the potential for misunderstanding about commissions.

It’s especially valuable when hiring new staff who will be paid entirely or in part on commissions. If you are an employee who works on commission but has not received a commission agreement, it may be prudent to ask for one.

A commission agreement is not legally required for employers and employees who operate on a commission basis. However, using them to ensure all parties are clear is a good idea. If there is a dispute, a legally executed commission agreement is an important document to help resolve the issue.

What to Include in a Commission Agreement?

Here are the elements to include in a commission agreement.

  • Effective Date: The date the agreement is entered into by all parties
  • Principal Name and Address: The employer’s name and address
  • Agent Name and Address: The employee’s name and home address
  • Agreement Items: The items the agent will sell on the principal’s behalf. In some cases, this is referred to as the Scope of Service
  • Term: The date on which the agreement will end
  • Geography: The area or territory in which the agent may sell the principal’s items
  • Commission Earnings. The financial terms of the agreement
  • Confidentiality: The privacy guidelines and penalties for violation
  • Termination: The conditions under which either party may end the agreement
  • Representation: Statement confirming that all parties are authorized to enter into the agreement
  • Governing Law: The jurisdiction covering the agreement
  • Assignment: Whether the contract can be assigned to a third party
  • Signatures and Dates

Commission Agreement Best Practices

Here are some best practices to follow when using a commission agreement.

Specificity

The commission agreement should specify the commission rate and how your revenue share is structured. Being more specific about the fee structure leads to a more effective agreement. With clear agreements, sales managers, agents, and principals can be confident and motivated to earn high commissions.

Transparency

When presenting your proposed commission agreements to potential employees or agents, transparency is essential. A commission agreement sample can be used to walk through the terms and conditions and assist with negotiations.

Transparency, especially around conditions that may be controversial, such as territories covered, helps potential employees to understand the what and the why.

Connect Face-to-Face

Whether in person or via a Zoom call, presenting the commission agreement face-to-face is essential. You do not want to email the agreement without explanation or context.

Presenting face-to-face also allows for a clear discussion of expectations, culture, and roles within the organization.

Commission Agreement Sample

To learn more, and to see a sample commission agreement, see the example below.

Commission Agreement screenshot

Download PDF
Download MS Word

Related Employment Documents

  • Notice of Contract Termination: Let a party know you wish to terminate an agreement they'd previously entered.
  • Employee Dress Code Policy: Set the standards of how employees present themselves in the workplace.
  • Employee of the Month Nomination Form: Nominate an employee for employee of the month.

Create your Commission Agreement here!

Legal Documents
  • All Legal Forms
  • Business Forms
  • Real Estate Forms
  • Personal and Family Forms
Popular Forms
  • Lease Agreements
  • Power of Attorney Forms
  • Eviction Notice
  • Living Will
  • Non-Disclosure Agreement
Resources
  • Legal Resources
  • Business
  • Real Estate
  • Personal & Family
  • Estate Planning
  • Financial
Company
  • Pricing
  • About Us
  • Careers
  • Contact Us
  • Partner With Us
Users
  • Account
  • Terms of Use
  • Privacy Policy
  • Cookie Policy
  • Do Not Sell My Personal Information
McAfee - Together is power.
Trustpilot

(855) 335-9779, Monday-Friday, 9AM - 7PM EDT

Facebook Twitter LinkedIn YouTube

Copyright 2023 Legal Templates LLC. Legal Templates LLC is not a lawyer, or a law firm and does not engage in the practice of law. Legal Templates cannot and does not provide legal advice or legal representation. All information, software and services provided on the site are for informational purposes and self-help only and are not intended to be a substitute for a lawyer or professional legal advice. Use of this site is subject to our Terms of Use. Legaltemplates.net is owned and operated by Resume Technologies Limited, London with offices in London United Kingdom.”

Esc
Commission Agreement screenshot

The document above is a sample. Please note that the language you see here may change depending on your answers to the document questionnaire.

Fill in the details

Thank you for downloading one of our free legal templates!

Would you leave us a review?

We hope you've found what you need and can avoid the time, costs, and stress associated with dealing with a lawyer.

A review would mean the world to us (it only takes about 15 seconds).

Please check your download folder for MS Word or open tabs for PDF so you can access your FREE Legal Template Sample

Thanks again, and good luck!

Leave My Review