Commission Agreement

All states
4.5 (19 reviews)
Updated Jan 19, 2024
~ 2 pages
A commission agreement form becomes necessary in circumstances when an individual or business entity, often the owner or creator, decides to employ another party to sell or distribute their goods, services, or intellectual property. It states the conditions under which the agent operates and the compensatory commission they will receive for performing the agreed tasks. Download this commission agreement template in PDF and fill it out with the help of the guide below.
This template is available in one format.
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Commission contracts play an integral role in the business landscape, especially in realms that necessitate the transfer of intellectual property ownership and rights. They provide a legally binding framework conducive to the smooth transfer of such rights from one party to another. More often than not, these agreements are pivotal in preserving the integrity of a business arrangement, as well as safeguarding the interests of all parties involved.

When to Use a Commission Agreement

A commission agreement form becomes necessary in circumstances when an individual or business entity, often the owner or creator, decides to employ another party to sell or distribute their goods, services, or intellectual property. This typically happens when looking to expand the reach of the offerings, improve sales, or venture into new markets. 

A sample commission agreement states the conditions under which the agent operates and the compensatory commission they will receive for performing the agreed tasks. The function of this agreement is akin to a promise ensuring both parties meet their demands and responsibilities. 


  • Principal — This can be an individual or business entity that recruits the services of another party, often referred to as the agent, to sell or distribute their products, services, or intellectual property. The principal's role in a commission agreement sample involves setting the commission rate for the agent and providing them with the necessary resources to perform their task. Upon the successful completion of the agreed-upon tasks by the agent, the principal is obliged to pay the agreed commission.

  • Agent — This is an individual or organization engaged by the principal to carry out specific tasks, generally involving the sale or distribution of products, services, or intellectual property. In the frame of the simple commission agreement sample, the agent is responsible for executing the duties in accordance with the agreement's terms. Upon performing these tasks successfully, the agent is entitled to a commission remuneration from the principal. Acknowledgment of this compensation forms an integral part of the commission agreement, ensuring both parties adhere to their roles and responsibilities as stipulated in the agreement.

Key Terms

  • Principal: This term refers to the party who owns the goods, services, or intellectual property that the agent is hired to sell or transfer.
  • Agent: An agent is an individual or entity contracted to sell or transfer the goods, services, or intellectual property on behalf of the principal.
  • Commission: The specific amount or percentage of the sales or transfer price paid to the agent as remuneration for their services.
  • Term: This conveys the duration of the agreement. It encompasses the commencement date and may include a termination date and provisions for extending or renewing the agreement.
  • Confidentiality: This term binds the agent from disclosing any sensitive or proprietary information about the principal or the business that they may gain access to during their tenure.

How to Write a Commission Agreement

Before penning the agreement, it's essential to have a comprehensive commission agreement template with the key terms involved, the duties assigned to each party, and any specific conditions relevant to the arrangement.

Creating a solid commission agreement involves some steps. Below is a bullet list detailing the process:

  1. Define the parties:
    Clearly state the names and contact information of the principal and the agent involved in the agreement. Be precise about their roles as outlined in the commission contract template.

  2. Outline the duties and responsibilities:
    Clearly explain what is expected of the agent, define the scope of work, and indicate any specific performance goals. A commission contract sample can provide you with a broad idea of the type of duties and responsibilities that are typically included.

  3. Specify the commission structure:
    Include details about how the commission will be calculated and when it will be paid. This could be a flat rate, a percentage of sales, or some combination of the two.

  4. State the terms of the agreement:
    Define how long the agreement will last. This includes the start and end dates, extension possibilities, and parameters for early termination.

  5. Include a confidentiality clause:
    To protect sensitive business information the agent may have access to, incorporate a confidentiality clause.

  6. Referral clause:
    If applicable, include how referrals will be handled. Determine if the agent will receive a commission for these, and if so, how much. A commission contract example may provide insight into handling this clause in your agreement.

  7. Draft the governing law clause:
    Mention the state or country whose law will govern the agreement.

  8. Signatures:
    Both parties should sign and date the document upon agreement.

The aforementioned steps should guide you in creating a comprehensive commission agreement. However, for highly sensitive or complex agreements, seeking legal counsel may be prudent.

Navigating business relationships becomes remarkably smooth and efficient when based on well-structured commission agreements, which act as the profound pillars for thriving partnerships. Drawing up such an agreement doesn't have to be an arduous task, not when you can turn to resources like a commission agreement template free of charge, readily accessible to ease the design and drafting process. 

Often available in an easy-to-use commission agreement PDF format, these templates not only facilitate seamless business operations but also play an indispensable role in securing your interests. This leaves you free to concentrate your efforts on enhancing business profitability and growth while the agreement takes care of the legalities and specifications of your business arrangement.

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