Commission Agreement Template
An agreement setting out how commissions are earned and paid to a salesperson, agent, or referral partner.
What this template includes
- ✓Appointment, commission rate, and payment terms
- ✓Chargebacks, pricing, and sales materials
- ✓Duties, non-compete, and independent status
- ✓Representations, confidentiality, and limitation of liability
- ✓Indemnification, dispute resolution, and force majeure
- ✓Legal fees and electronic signatures
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COMMISSION AGREEMENT
This Commission Agreement (the "Agreement") is made on between:
Company: , located at ("Company"); and
Representative: , located at ("Representative").
1. APPOINTMENT
The Company engages the Representative to the Company's products or services (the "Products") on a basis in . The Representative may present themselves as an authorized representative of the Company for the sale of the Products. If a territory is agreed, the Representative will focus their efforts within it and will not actively sell outside it without the Company's consent.
2. COMMISSION
The Company will pay the Representative a commission of % of generated by the Representative. "Net sales" means the amount actually received by the Company, excluding taxes, shipping, discounts, and refunds.
3. WHEN COMMISSION IS EARNED
A commission is earned only when the Company has received full payment from the customer for a qualifying sale directly resulting from the Representative's efforts.
4. PAYMENT TERMS
Commissions are calculated and paid within days after the Company receives payment from the customer, together with a statement of the sales included.
5. CHARGEBACKS
If a customer cancels, refunds, or fails to pay after a commission has been paid, the Company may deduct the corresponding amount from future commissions or require repayment.
6. PRICING AND SALES MATERIALS
The Company sets the prices and terms for the Products and may change them at any time with reasonable notice to the Representative. The Company will provide any promotional or sales materials the Representative needs, and the Representative will use only Company-approved materials, obtaining the Company's written approval before using their own. The Company may also provide a standard order or sales form for the Representative to use with customers.
7. DUTIES OF THE REPRESENTATIVE
The Representative will use reasonable efforts to promote and sell the Products, act honestly and in the Company's best interest, and not make any representations about the Products that the Company has not authorized.
8. NON-COMPETE
During the term of this Agreement, the Representative will not sell or promote products or services that directly compete with the Products . If the parties agree, this restriction may also continue for months after this Agreement ends within the same territory, to the extent permitted by law. Any post-termination restriction must be reasonable in time and area to be enforceable.
9. EXPENSES AND INDEPENDENT STATUS
The Representative is an independent contractor, responsible for their own taxes and has no authority to bind the Company beyond taking orders. The Company will reimburse pre-approved, out-of-pocket expenses in line with its expense policy; any other expenses are the Representative's own.
10. REPRESENTATIONS AND WARRANTIES
Each party confirms that it has the right to enter into this Agreement and that doing so does not breach any other agreement it is bound by. The Representative will comply with all laws that apply to selling the Products.
11. CONFIDENTIALITY
The Representative will keep the Company's non-public information (including pricing, customer details, and business plans) confidential, during and after this Agreement. When this Agreement ends, or on the Company's request, the Representative will return or securely destroy all confidential materials and copies in their possession.
12. LIMITATION OF LIABILITY
Neither party is liable to the other for any indirect, incidental, special, or consequential losses arising out of this Agreement. Each party's total liability under this Agreement will not exceed the total commissions paid or payable under it.
13. INDEMNIFICATION
Each party will indemnify and hold the other harmless from third-party claims, damages, losses, or reasonable legal costs that arise from its own breach of this Agreement, negligence, or willful misconduct, including any unauthorized representation the Representative makes about the Products.
14. TERM AND TERMINATION
This Agreement begins on and continues until terminated by either party with days' written notice. Commissions properly earned before termination will still be paid, subject to the chargeback terms above.
15. DISPUTE RESOLUTION
If a dispute arises out of this Agreement, the parties will first try to resolve it through good-faith negotiation. If they cannot resolve it within a reasonable time, they will attempt mediation before starting court proceedings. If mediation does not resolve the dispute, either party may bring the matter before the courts identified in the Governing Law section.
16. FORCE MAJEURE
Neither party is responsible for delays or failures in performing its obligations caused by events beyond its reasonable control, such as natural disasters, fire, flood, war, civil unrest, epidemics, or power and internet outages. The affected party will notify the other as soon as reasonably possible and resume performance once the event has passed.
17. LEGAL FEES
If legal action is necessary to enforce this Agreement, the prevailing party is entitled to recover its reasonable costs and legal fees, in addition to any other relief awarded.
18. ELECTRONIC SIGNATURES AND COUNTERPARTS
This Agreement may be signed in counterparts, each of which is considered an original and which together form one agreement. Electronic signatures, and copies of signatures delivered by email or through an electronic signing service, have the same legal effect as handwritten signatures on an original document.
19. GENERAL PROVISIONS
(a) Governing Law. This Agreement is governed by the laws of .
(b) Entire Agreement. This Agreement is the complete agreement between the parties and replaces any prior discussions, understandings, or agreements on this subject.
(c) Amendments. Any change to this Agreement must be in writing and signed by both parties.
(d) Severability. If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions will remain in full effect.
(e) Waiver. If a party does not enforce a provision, it does not give up its right to enforce that or any other provision later.
(f) Assignment. Neither party may assign or transfer this Agreement without the other party's prior written consent.
(g) Notices. Any notice under this Agreement must be given in writing (email is acceptable) to the other party.
IN WITNESS WHEREOF, the parties have signed this Agreement.
Date:
Company
Name:
Title:
Signature: ______________________
Representative
Name:
Signature: ______________________
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Sign It Free with SignovaXWhat is a commission agreement?
A commission agreement is a contract that sets out how a salesperson, agent, or partner earns commission for sales or referrals they generate. It defines the commission rate, how and when it is calculated, and when it gets paid — turning a pay-for-performance arrangement into clear, written terms.
Businesses use commission agreements with sales reps, affiliates, brokers, and independent agents to reward results while avoiding disputes over how much is owed.
How commission structures work
Commission can be a percentage of each sale, a flat amount per deal, or a tiered rate that increases with volume. Agreements also need to say when a commission is "earned" — for example, when the customer pays, not just when the order is placed — and how returns or cancellations affect it.
This template lets you define the rate, the basis for calculation, and the payment timing that fit your business.
What to include
A solid commission agreement covers the commission rate and structure, what sales qualify, when commissions are earned and paid, record-keeping, and what happens when the agreement ends. This template also addresses the independent status of the salesperson.
Enter the parties, the commission rate, and the payment terms, then download your agreement.
How to fill in and sign this agreement
Fill in the placeholders in the form above and download the agreement as a PDF or editable Word file for free — no account needed.
To sign, upload the PDF to SignovaX and send it for signature. The other party signs online with no account, and you get a signed copy with a full audit trail and integrity hash.
Frequently asked questions
When is a commission considered earned?
That depends on the agreement. Common triggers are when the customer places an order, when they pay, or when a return period ends. This template lets you specify the exact point at which commission is earned.
What happens to commission if a sale is refunded?
Many agreements claw back or withhold commission on refunded or cancelled sales. You can set how returns affect commission when filling in the template.
Can commission rates be tiered?
Yes. You can use a flat rate, a percentage, or tiers that rise with sales volume. Describe the structure you want in the template.
Is this commission agreement free?
Yes. Fill it in and download it as a PDF or Word document for free. A SignovaX account is only needed to send it for electronic signature.
Does a commission agreement make someone an employee?
Not by itself. This template treats the salesperson as an independent party responsible for their own taxes. Employment status depends on the wider working relationship, not just how someone is paid.
Disclaimer: This template is provided for general informational purposes only and is not legal advice. Laws vary by location. For important agreements, consider having a qualified lawyer review your contract before signing.