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Sales Representative Contract

Sales Representative Contract for the United States

Sales Representative Contract Template for United States

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Sales Representative Contract

"I need a Sales Representative Contract for my software company to engage an independent sales rep to cover the West Coast territory, with a tiered commission structure starting at 8% and increasing based on performance targets, effective March 1, 2025."

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What is a Sales Representative Contract?

The Sales Representative Contract serves as the foundational document governing the relationship between companies and their sales representatives in the United States. This agreement is essential when a business wants to expand its sales force without directly employing sales staff. It addresses crucial aspects such as commission structures, sales territories, performance metrics, and regulatory compliance under both federal and state laws. The contract protects both parties' interests by clearly defining expectations, compensation terms, and termination conditions while ensuring compliance with relevant sales representative protection acts.

What sections should be included in a Sales Representative Contract?

1. Parties: Identification of the company and sales representative

2. Background: Context of the agreement and general purpose

3. Definitions: Key terms used throughout the agreement

4. Appointment and Territory: Scope of representation and geographic territory

5. Compensation Structure: Commission rates, calculation methods, and payment terms

6. Duties and Responsibilities: Specific obligations of the sales representative

7. Term and Termination: Duration and conditions for ending the agreement

What sections are optional to include in a Sales Representative Contract?

1. Non-Compete Clause: Restrictions on competitive activities (include when protection against competition is needed and legally enforceable in the jurisdiction)

2. Training Requirements: Specific training obligations (include when specialized product knowledge is required)

3. Performance Metrics: Specific sales targets and evaluation criteria (include when performance-based conditions are desired)

4. Expense Reimbursement: Terms for business expense compensation (include when the representative will incur reimbursable expenses)

What schedules should be included in a Sales Representative Contract?

1. Commission Schedule: Detailed breakdown of commission rates and calculations

2. Territory Map: Geographic definition of sales territory

3. Product List: List of products/services the representative is authorized to sell

4. Sales Targets: Specific performance goals and metrics

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

alex.den.21@genieai.co
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Industries

Fair Labor Standards Act (FLSA): Federal law governing employee classification, determining whether sales representatives should be classified as employees or independent contractors, affecting overtime, minimum wage, and other employment standards

Federal Trade Commission Act: Regulates sales practices and representations made by sales representatives to protect consumers from unfair or deceptive practices

Internal Revenue Code: Federal tax regulations affecting worker classification, tax withholding requirements, and treatment of commissions as income

Federal Anti-Discrimination Laws: Including Title VII, ADA, and ADEA, which protect against discrimination in employment relationships

Federal Independent Sales Representative Protection Acts: Federal legislation specifically protecting sales representatives' rights, particularly regarding commission payments

State Sales Representative Acts: State-specific laws providing additional protections for sales representatives, including commission payment terms and termination requirements

State Labor Laws: State-specific regulations governing employment relationships, working conditions, and worker rights

State Non-Compete Regulations: State-specific rules governing the enforceability and limitations of non-compete and non-solicitation agreements

Uniform Commercial Code (UCC): Standardized commercial law governing sales and business transactions across states

Commission Payment Regulations: Federal and state laws governing the timing, calculation, and payment of commissions, including post-termination obligations

IRS Classification Guidelines: Federal guidelines determining worker classification as employee or independent contractor for tax purposes

Trade Secret and IP Laws: Federal and state laws protecting intellectual property, trade secrets, and confidential information in sales relationships

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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