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Outside Sales Commission Agreement Template for United States

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Key Requirements PROMPT example:

Outside Sales Commission Agreement

"I need an Outside Sales Commission Agreement for hiring independent sales representatives across multiple states to sell our software products, with a tiered commission structure starting at 10% and increasing based on performance, and including non-compete provisions for the Northeast territory."

Document background
The Outside Sales Commission Agreement serves as a crucial document for businesses operating in the United States that rely on external sales representatives to generate revenue. This agreement becomes necessary when companies wish to establish clear, legally-binding terms for commission-based sales relationships, whether with independent contractors or employees. It addresses key aspects such as territory rights, commission structures, performance metrics, and payment terms while ensuring compliance with federal and state regulations. The agreement helps prevent disputes by clearly defining the relationship, responsibilities, and compensation arrangements between the parties.
Suggested Sections

1. Parties: Identification of the company and sales representative

2. Background: Context of the agreement and relationship between parties

3. Definitions: Key terms used throughout the agreement including Commission, Territory, Products/Services

4. Appointment and Territory: Scope of sales representative's authority and geographic territory assignment

5. Commission Structure: Details of commission rates, calculations, payment terms and conditions

6. Sales Representative Obligations: Duties, responsibilities, and performance requirements of the sales representative

7. Company Obligations: Responsibilities of the company including support, training, and resources

8. Term and Termination: Duration of agreement and conditions for termination by either party

9. Post-Termination Obligations: Rights and obligations that survive termination, including commission payments

10. General Provisions: Standard legal provisions including governing law, notices, and amendments

Optional Sections

1. Non-Compete: Restrictions on competitive activities during and after the agreement term

2. Expense Reimbursement: Terms and conditions for reimbursing approved business expenses

3. Training Requirements: Mandatory training, certification, or product knowledge requirements

4. Intellectual Property: Protection of company's IP rights and confidential information

5. Insurance Requirements: Required insurance coverage for sales representative

Suggested Schedules

1. Schedule A - Commission Rate Schedule: Detailed breakdown of commission rates by product/service category

2. Schedule B - Territory Map: Geographic definition and map of assigned sales territory

3. Schedule C - Sales Targets: Specific sales goals, quotas, and performance metrics

4. Schedule D - Expense Policy: Detailed guidelines for expense reporting and reimbursement

5. Schedule E - Product List: List of products/services covered under the agreement

Authors

Alex Denne

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

Clauses






























Industries

Fair Labor Standards Act (FLSA): Federal law establishing wage, overtime, and employment standards, including Section 7(i) exemption for commissioned employees in retail/service establishments

FICA Requirements: Federal Insurance Contributions Act requirements for Social Security and Medicare tax obligations for commissioned employees

Internal Revenue Code - Contractor Classification: Federal guidelines defining the distinction between independent contractors and employees for tax and benefit purposes

State Wage and Hour Laws: State-specific regulations governing minimum wage, overtime, and payment timing for commissioned employees

State Commission Payment Laws: State-specific requirements regarding timing, calculation, and payment of sales commissions

Written Commission Agreement Requirements: State-mandated requirements for documenting commission structures and terms in writing

IRS Independent Contractor Guidelines: Federal guidelines establishing criteria for determining worker classification status

State ABC Tests: State-specific tests for determining worker classification, particularly relevant in states like California

Earned Commission Regulations: Laws governing when commissions are considered earned and payable to the sales representative

Post-termination Commission Rules: Regulations regarding payment of commissions after employment or contract termination

Statute of Frauds: Legal requirement that certain contracts must be in writing to be enforceable

State Contract Formation Rules: State-specific requirements for creating legally binding contracts

Industry-Specific Sales Regulations: Sector-specific rules and regulations governing sales practices and commission structures in particular industries

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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