Commitment Agreement Template for United States

A Commission Agreement sets out how and when someone gets paid based on their sales performance or business deals. It's commonly used between companies and their sales representatives, real estate agents, or business brokers to spell out commission rates, payment schedules, and performance targets.

These contracts protect both parties by clearly defining what counts as a successful sale, when commissions are earned, and how they'll be calculated. They're especially important in industries like securities trading and insurance sales, where federal regulations require specific disclosures about compensation. Good agreements also cover important details like post-termination commissions and clawback provisions.

Use a Commission Agreement any time you're paying someone based on their sales performance or deal-making success. This is essential when hiring sales representatives, real estate agents, brokers, or consultants who earn variable compensation tied to results. The agreement becomes particularly important in regulated industries like securities and insurance.

Having this agreement in place before the first sale helps prevent disputes about payment terms, performance metrics, and commission calculations. It's especially crucial when dealing with complex scenarios like team sales, multi-year contracts, or situations where commissions might continue after employment ends. Many states require written commission terms for sales employees.

• Sales Commission Contract: Standard agreement for traditional sales roles, defining performance targets and commission rates for individual salespeople
• Commission Based Employment Contract: Combines regular employment terms with commission structure, often including base salary plus variable pay
• Commission Only Contract: Pure performance-based compensation with no base salary, common in real estate and independent sales
• Commission Split Agreement: Details how commissions are shared between multiple parties, often used in team sales or broker relationships
• Commission Contract Agreement: Comprehensive version covering complex scenarios like multi-territory sales or tiered commission structures

• Sales Representatives: Primary beneficiaries who earn commissions based on their sales performance, including both employees and independent contractors
• Employers/Companies: Organizations that pay commissions and set performance metrics, responsible for tracking sales and processing payments
• Legal Counsel: Draft and review Commission Agreements to ensure compliance with state and federal employment laws
• HR Managers: Implement and manage these agreements, handle documentation, and resolve commission-related disputes
• Sales Managers: Help define commission structures, monitor performance, and verify commission calculations
• Brokers/Agents: Independent professionals who rely on commission agreements for real estate, insurance, or securities transactions

• Basic Information: Gather full legal names, addresses, and roles of all parties involved in the commission arrangement
• Commission Structure: Define exact commission rates, payment schedules, and any performance tiers or bonuses
• Sales Details: Specify what constitutes a completed sale, territory limits, and customer attribution rules
• Payment Terms: Document when commissions are earned, calculated, and paid out, including any clawback provisions
• Performance Metrics: List specific goals, quotas, or targets that affect commission earnings
• Legal Requirements: Check state-specific laws on commission payments and required disclosures
• Agreement Duration: Set the term length and conditions for renewal or termination

• Party Details: Full legal names, addresses, and roles of all parties involved in the commission relationship
• Commission Terms: Clear definition of commission rates, calculation methods, and payment schedules
• Performance Criteria: Specific metrics and conditions that trigger commission payments
• Payment Terms: Timing, method, and conditions for commission payments, including any deductions
• Territory Rights: Geographic or customer segment limitations for sales activities
• Term and Termination: Agreement duration, renewal options, and termination procedures
• Governing Law: Applicable state laws and jurisdiction for dispute resolution
• Non-Compete Clauses: Restrictions on competitive activities during and after the agreement

A Commission Agreement differs significantly from an Agency Agreement, though they're often confused. While both involve representation relationships, their scope and focus are quite different.

• Primary Purpose: Commission Agreements focus specifically on payment terms and performance metrics for sales-based compensation, while Agency Agreements cover broader authority to act on behalf of another party
• Scope of Authority: Agency Agreements grant legal power to make decisions or enter contracts on behalf of the principal; Commission Agreements only authorize sales activities
• Payment Structure: Commission Agreements detail specific performance-based compensation formulas, while Agency Agreements may include fixed fees, expenses, or various compensation methods
• Legal Obligations: Agency Agreements create fiduciary duties and broader liability considerations, whereas Commission Agreements primarily focus on sales targets and payment terms
• Duration: Agency Agreements typically establish ongoing representation relationships, while Commission Agreements often focus on specific sales periods or targets