Commission Agreement

This is a precedent commission agreement. It is a flexible document, designed in such a way that it may be adapted for use in a wide range of circumstances where one person or company must make payments to another person or company on a commission basis.

Another common situation for using a commission contract is where a service provider wants to be remunerated by way of commission so as to share in the profits of an enterprise or project, without taking on the rights and responsibilities of an equity share.

The key provisions of the agreement are as follows:

• Definition of "base amount": this is used in the calculation of the amounts payable under the agreement.
• Definition of "trigger event": this definition specifies the event that gives rise to payments.
• Commission: this clause sets out exactly what must be paid, when and how.

A full listing of the section titles in the commission agreement is as follows: (1) Definitions and interpretation, (2) Term, (3) Commission, (4) Warranties, (5) Limitations and exclusions of liability and indemnities, (6) Termination, (7) Consequences of termination, and (8) General.

The commission agreement is 7 pages long and is supplied by email link, in MS Word (.doc) form, immediately following receipt of payment.

How are commission payments calculated under this agreement?

The template commission agreement uses three defined terms to structure the commission payments. First, a "base amount" is defined. This base amount could for example be the amount payable under a category of contract. Second, a "trigger event" is defined, which is the event giving rise to the payment obligation. An example of a trigger event might be a company entering into a contract following a referral. Third, a "commission" level is defined, a percentage of the base amount payable by one party to the other in respect of a trigger event.

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