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COMMISSION AGREEMENT

A Commission Agreement, also known as Introduction or Finder's Fee Agreement, is  an agreement where one party (a Supplier of goods and/or services) wishes to engage another (the Introducer) to introduce potential clients for the services and/or goods in return for a Commission. In other words, the Introducer is appointed to introduce potential clients to the Supplier in order to generate more sales and increase the customer base and the Introducer will earn a Commission in return for its efforts.

 

Commission Agreements are essentially a type of agency agreement, under which the agent acts as a representative of its principal but has no authority to enter into contractual arrangements on its behalf. Essentially an Introducer differs from an agent as he does not directly sell the products and/or services of the Supplier but it merely introduces potential clients to the Supplier. Once the introduction is made the Introducer will steps back, it will have no further role in the relationship between the Supplier and the introduced client; the selling and supplying of the services and/or products will be carried out directly by the Supplier.

 

If you require an agreement which creates a principal – agent relationship, you should use our Agency Agreement.

 

Broadly, a Commission Agreement is where one party appoints another party to find third parties who may want to purchase goods and/or services from the first party. Commission is payable to the Introducer if the third party purchases such goods and/or services.

 

This Commission Agreement template regulates the relationship between the parties and sets out the rights and obligations of both parties. It is balanced in that it takes into account the interests of both parties.

 

Under this Commission Agreement the Introducer's main obligation is to make introductions to the Supplier, however making an introduction does not trigger commission; commission is only payable if, following an introduction, a prospective new client enters into a contract with the Supplier for the goods and/or services. This protects the Supplier as no commission is payable unless the Supplier and the introduced new client enter into a contract.

 

This Agreement allows the parties to determine how Commission is to be calculated. The Agreement suggests that the precise amount of Commission is based on payments made under the contract between the Supplier and the introduced new client. In other words, Commission is calculated on the basis of net income received under a contract for a certain period. This clause can however be modified to suit the particular needs and circumstances of the case.

 

Under this Commission Agreement the Introducer will receive a Commission for all contracts entered into between the Supplier and any introduced client within a set period (Introduction Period). Note that even if Commission is not paid indefinitely but only in respect of income received during a specified period, the introduction period and the obligation to pay commission is not affected by termination of this agreement, so that, for example, commission can be triggered where a prospective new client enters into a relevant contract post-termination arising from an introduction made the day before this agreement terminates. In other words, Commission is payable after termination in respect of contracts entered into as a result of introductions made before the termination date. This arrangement protects the Introducer against the Supplier terminating the agreement in order to escape payment of commission after a particularly lucrative new client is introduced.

 

Furthermore the Agreement provides that Commission is only payable on income actually received from any contract entered into by the Supplier with a prospective new client during the introduction period. This is a Supplier-favourable mechanism and protects the Supplier against having to pay Commission on sums never received, perhaps as a result of breach by the client or early termination.

 

This Commission Agreement is fully comprehensive; it sets out the precise scope of and limitations on the Introducer's authority. It contains clauses limiting the scope of the Introducer's authority, in particular to ensure that it has no power to bind the Supplier or commit the Supplier to any obligation or contract. Also, it allows for the parties to decide the scope of the Introducer's authority in terms of targeting potential clients. This clause can be edited to either allow the Introducer to introduce only prospective clients who are located in a specific geographic territory or, where the Supplier does not have in mind any one particular client to target, the clause can be edited to give the Introducer a wider scope without restricting its reach to target potential clients.

 

In addition, this Agreement also contains: a Non-Competition Clause, a Mutual Confidentiality Clause and Anti-bribery Provisions.

 

The Non-Competition Clause is optional; it prevents the Introducer from providing similar introduction services to the Supplier's competitors during the duration of the agreement.

 

Under the Mutual Confidentiality Clause both the Supplier and the Introducer will be able to keep certain information confidential thus ensuring that such information is not misused.

 

The Anti-bribery Provisions have been included to ensure that the Supplier complies with the Bribery Act 2010. These provisions are aimed at protecting the Supplier from actions carried out by the Introducer which may breach the provisions of the Act. The Bribery Act (BA 2010) includes a new corporate strict liability offence of failure to prevent bribery by an associated person. A commercial organisation will be guilty of an offence if a person associated with it bribes another person intending to obtain or retain business for the commercial organisation, or to obtain or retain an advantage in the conduct of business for the commercial organisation. As an Introducer acts as the Supplier's agent, the Introducer will be an associated person to the Supplier for the purposes of the Act. The only defence available to the Supplier is if it can show that it has in place adequate procedures designed to prevent bribery by its introducers.

 

This Commission Agreement contains the following clauses:

 

  1. Definitions and Interpretation
  2. Appointment and Introductions
  3. Commencement and Duration
  4. Commission and Payment
  5. Anti-Bribery Compliance
  6. Obligations of the Supplier
  7. Confidentiality
  8. Termination
  9. Non Circumvention
  10. Relationship of the Parties
  11. Entire Agreement
  12. Variation
  13. Assignment
  14. Waiver
  15. Force Majeure
  16. Severability
  17. Notices
  18. Third Party Rights
  19. Non Competition
  20. Governing Law and Jurisdiction

     

     SCHEDULE 1

 

 

This Commission Agreement Template is in Microsoft Word format, written in plain English, easy to use and edit.

 

 

 

 

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