Free Commission Agreement Template — Fill & Sign Online
A commission agreement sets out how someone is paid for sales they bring in. Nearly every dispute in this area comes down to one question the contract failed to answer: when exactly is commission earned: at the signature, at the invoice, or when the customer's money actually arrives?
The second question is what happens to that commission if the salesperson leaves before the customer pays. Decide both in writing, in advance, while everybody is still friendly.
Self-signing is free, local & private, never uploaded. Sending for signature needs a free account (just your email).
Terms a commission agreement must fix
- Rate and base: a percentage of what: gross revenue, net revenue, or gross profit? These produce very different numbers on the same sale.
- Earning trigger: signature, invoice, or cash received. Cash received protects you from unpaid invoices; the earlier triggers are more attractive to good salespeople.
- Payment date: the cycle on which earned commission is actually paid out.
- Chargebacks: what happens if the customer refunds, cancels, or churns inside a set window.
- Post-termination: whether commission is owed on deals closed before departure but paid after. Note that several jurisdictions give commercial agents statutory rights here that a contract cannot remove.
- Draw against commission: if there is an advance, whether it is recoverable from future commission or not.
- Territory or accounts: which customers count, and what happens when two people touch the same deal.
Mistakes that end in a commission dispute
- Never defining when commission is earned. This is the origin of most claims, and courts usually resolve ambiguity against the party who drafted the contract.
- Silence on post-termination commission. In the EU and UK, commercial agents have statutory rights that override an unfavourable contract.
- "Percentage of sales" with no definition of sales. Is that before or after discounts, returns, shipping and tax?
- No cap, no floor, no review clause. A rate that made sense at $10k a month may be ruinous at $500k.
Common questions
When should commission be paid?
Most businesses pay in the cycle after the customer's payment clears, which protects against bad debt. Paying on signature is more attractive to salespeople but leaves you exposed if the invoice is never paid.
Is commission owed after someone leaves?
Whatever the contract says. Subject to statutory rights. In the UK and EU, Commercial Agents regulations can entitle an agent to commission on deals concluded after termination, and those rights cannot be contracted away.
Can a commission rate be changed later?
Only by agreement, unless the contract reserves a right to change it with notice. Changing a rate unilaterally without such a clause is a breach: and a fast way to lose both the salesperson and the argument.
This page is general information for small businesses, not legal advice. For your specific situation, talk to a licensed attorney in your state.