The Broker Contract Commission agreement serves as the foundational document governing the financial relationship between brokers and their clients in the United States. This contract type is essential for clearly defining commission structures, preventing disputes, and ensuring regulatory compliance. It typically includes specific triggers for commission payments, protection mechanisms for both parties, and compliance with state-specific broker laws. The agreement is particularly important in regulated industries such as real estate, securities, and insurance, where specific federal and state requirements must be met.
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1. Parties: Identification of broker and client/principal, including full legal names and addresses
2. Background: Context of the agreement and relationship between parties
3. Definitions: Key terms used throughout the agreement including 'Commission', 'Transaction', 'Closing'
4. Scope of Services: Detailed description of broker's services and responsibilities
5. Commission Structure: Details of commission rates, calculation methods, and payment terms
6. Payment Terms: When and how commission payments will be made
7. Term and Termination: Duration of agreement and conditions for termination
8. Governing Law: Applicable jurisdiction and legal framework
1. Exclusivity Clause: Terms of exclusive representation, applicable when broker has exclusive rights to represent client
2. Tail Period: Post-termination period during which broker may still be entitled to commission, used in longer-term relationships or complex transactions
3. Dispute Resolution: Mediation/arbitration procedures, recommended for higher-value agreements
4. Insurance Requirements: Specific insurance coverage requirements, used when dealing with high-value transactions or regulated industries
1. Commission Rate Schedule: Detailed breakdown of commission rates for different types of transactions
2. Service Territory: Geographic area covered by the agreement
3. Required Licenses: Copies of broker's licenses and certifications
4. Transaction History: List of completed or pending transactions, if applicable
Relevant legal definitions
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