Commission Share Agreement Template for Philippines

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Key Requirements PROMPT example:

Commission Share Agreement

"I need a Commission Share Agreement for our real estate agency to engage independent property consultants, with a tiered commission structure ranging from 2% to 5% based on property value, and the agreement should commence from January 1, 2025."

Document background
The Commission Share Agreement is a crucial legal document used in the Philippines when establishing commission-based business relationships between parties. It is particularly relevant when one party (typically a principal company) agrees to pay another party (such as a sales agent or distributor) a commission based on successful sales, referrals, or other specified business outcomes. This agreement type is common in various industries and must comply with Philippine legal requirements, including the Civil Code, Labor Code, and relevant tax regulations. The document typically includes detailed commission structures, payment terms, performance metrics, and reporting requirements, while also addressing important aspects such as confidentiality, non-compete provisions, and dispute resolution mechanisms. It serves as a vital tool for businesses operating in the Philippine market who wish to establish clear, legally-compliant commission arrangements with their business partners.
Suggested Sections

1. Parties: Identifies and provides full details of the parties entering into the agreement, including their legal names, addresses, and registration details if applicable

2. Background: Sets out the context of the agreement and the parties' intentions

3. Definitions: Defines key terms used throughout the agreement for clarity and consistency

4. Appointment and Scope: Establishes the nature of the relationship and the scope of services/products covered by the commission arrangement

5. Commission Structure: Details the agreed commission rates, tiers if applicable, and basis for calculation

6. Payment Terms: Specifies when and how commission payments will be made, including payment frequency and method

7. Reporting and Documentation: Outlines the requirements for sales reporting, documentation, and verification of commission calculations

8. Rights and Obligations: Lists the specific duties and responsibilities of each party under the agreement

9. Term and Termination: Specifies the duration of the agreement and conditions for termination

10. Confidentiality: Establishes obligations regarding confidential information shared during the course of the agreement

11. Governing Law: Specifies that Philippine law governs the agreement and outlines dispute resolution procedures

12. General Provisions: Includes standard contractual provisions such as force majeure, entire agreement, and amendments

Optional Sections

1. Non-Compete: Restrictions on competitive activities - include when protecting market share or client relationships is crucial

2. Performance Targets: Specific sales or performance goals - include when commission rates are tied to performance levels

3. Training and Support: Details of training or support provided - include when significant product knowledge or training is required

4. Insurance Requirements: Specific insurance coverage requirements - include when dealing with high-value products or services

5. Intellectual Property: IP rights and usage - include when branded materials or proprietary information is involved

6. Data Protection: Specific data handling requirements - include when personal or sensitive data processing is involved

7. Marketing and Promotion: Guidelines for marketing activities - include when the commissioner will be involved in promotion

8. Territory Restrictions: Geographic limitations - include when territory exclusivity is granted

Suggested Schedules

1. Schedule A - Commission Rates: Detailed breakdown of commission rates, including any tiered structure and calculation examples

2. Schedule B - Products/Services: Comprehensive list of products or services covered by the commission arrangement

3. Schedule C - Reporting Template: Standard format for sales reporting and commission calculations

4. Schedule D - Performance Metrics: Detailed performance indicators and measurement criteria if applicable

5. Schedule E - Territory Map: Geographic boundaries of the territory if applicable

6. Appendix 1 - Contact Details: Key contact information for both parties

7. Appendix 2 - Required Documentation: List of documents required for commission claims and verification

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses
Relevant Industries

Retail

Real Estate

Insurance

Financial Services

Technology

Telecommunications

Manufacturing

Professional Services

Healthcare

Automotive

Consumer Goods

Travel and Tourism

Education

Entertainment

Construction

Relevant Teams

Sales

Legal

Finance

Human Resources

Business Development

Operations

Compliance

Commercial

Partner Relations

Revenue Operations

Marketing

Account Management

Relevant Roles

Sales Director

Business Development Manager

Commission Agent

Sales Representative

Channel Partner Manager

Chief Revenue Officer

Legal Counsel

Compliance Officer

Finance Manager

Human Resources Director

Commercial Director

Partnership Manager

Regional Sales Manager

Marketing Director

Account Executive

Business Owner

Managing Director

Operations Manager

Industries
Civil Code of the Philippines (Republic Act No. 386): Provides the fundamental rules governing contracts, obligations, and commercial relationships between parties. Particularly relevant are Book IV on Obligations and Contracts and provisions on agency relationships.
Labor Code of the Philippines (Presidential Decree No. 442): Regulates employment relationships, including provisions on compensation, terms of employment, and worker protection. Relevant for ensuring the commission structure complies with labor laws.
National Internal Revenue Code (NIRC): Governs the taxation of commission-based income, including withholding tax requirements and reporting obligations for both parties.
Social Security Law (Republic Act No. 11199): Mandates social security coverage and contributions for individuals earning commission-based income.
PhilHealth Law (Republic Act No. 7875): Requirements for health insurance coverage for individuals working on commission basis.
Anti-Graft and Corrupt Practices Act (Republic Act No. 3019): Ensures transparency and legitimacy in commission arrangements, particularly relevant when dealing with government contracts or regulated industries.
Fair Competition Act (Republic Act No. 10667): Ensures commission arrangements do not create unfair competition or monopolistic practices in the market.
Data Privacy Act of 2012 (Republic Act No. 10173): Governs the handling of personal and financial information in commission arrangements, including payment details and personal information of parties involved.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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