Commission Agreement

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A Commission Agreement is a legal agreement between two parties where an Introducer brings clients to a business. The relationship benefits both parties because the Introducer is paid a Commission for introducing clients and the business (Supplier) has the opportunity to increase sales. The agreement sets out how both parties will benefit from this arrangement.

A Commission Agreement is in some ways an agency agreement, where the Introducer is independent but acts on behalf of the Supplier. The Introducer cannot sign contracts on the Supplier’s behalf and does not sell their products or services. The relationship is purely about making the introduction and once this has happened the Supplier takes over the client relationship and makes the sale.

The Commission Agreement sets out the nature of the relationship between the Introducer and Supplier and clearly states the rights and obligations of both parties. Under this Commission Agreement the Introducer is only paid once the new client enters into a contract with the Supplier. It allows flexibility in how Commission will be calculated, which is generally based on the income that the Supplier receives from the new client during a specified period of time, known as the Introduction Period.

The Commission Agreement will cover introductions made when the agreement was in force even if the contract is later terminated. This means that Commission cannot be reneged on, which protects the Introducer. The Agreement also ensures that payments are only made to the Introducer on income that is actually received by the Supplier, which protects the Supplier in the event that they do not receive any or all of money due.

This Commission Agreement, written in plain English, provides for a complete statement of the limits of the Introducer’s authority and sets a boundary between the two parties so that the Supplier avoids any unexpected obligations under the arrangements. It also makes clear what the Introducer’s authority will be when marketing to potential clients, e.g. within a certain sector or geographical area. This avoids situations where the Introducer oversteps their authority and also prevents competition with the Supplier’s own sales or marketing initiatives.

The Commission Agreement contained in the business folder on our website protects Suppliers and ensures they are fully compliant with existing legislation, particularly with regards to non-competition, confidentiality and anti-bribery, all of which are essential these days in protecting Suppliers and ensuring compliance with the law, including the Bribery Act 2010.

Deed of Gift

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If you have ever wondered how to transfer an asset legally to another person then this article will be of interest to you. People do this reasonably regularly and it is actually a very straightforward process, as long as you have the correct legal document in place. Known as a Deed of Gift it will allow you to transfer ownership of practically any asset; not just money but also shares, property or a range of other assets.

The key feature of a Deed of Gift is that no payment is given by the party who is receiving the asset. This is what distinguishes the legal agreement from a contract governing a sale or a loan agreement. In legal terms the person giving the gift is called the Donor and the person receiving it is called the Donee. Importantly, as the agreement does not involve a payment the signing of the contract must be witnessed and the witnesses must have no interest in the arrangement.

Gifts are currently exempt from Inheritance Tax if the Donor lives for at least seven years after the gift has been made, as long as the Donor does not retain an interest in the gift. However, if the Donor dies within seven years then Inheritance Tax will be payable on the value of the gift. Spouses or registered civil partners are generally exempt from Inheritance Tax, as long as they have a permanent home in the UK. In addition, gifts made to some organisations, such as charities, museums, universities and community amateur sports clubs are also exempt.

The following are the most common Deed of Gift agreements:

Deed of Gift Shares
This agreement allows a person to transfer shares or other securities in a company as a gift to another individual. It is important to note that ownership and interest will be transferred completely and the Donor will retain no rights after they are gifted, including to dividends. Before transferring shares the Donor should also check to ensure there are no restrictions in the company’s Articles of Association that would prevent shares from being transferred in this way.

Deed of Gift Property
This is a common agreement and is used to transfer property or land as a gift from one person to another. It should be noted that, as the gift is unconditional, the Donor will retain no rights or interest in the property or land, which would include rent.

Dead of Gift Object
This is a flexible agreement and covers many different types of asset including works of art, antiques, classic cars or wine collections. As with any other Deed of Gift, once the agreement has been signed the legal ownership will pass immediately to the Donee and the Donor cannot subsequently take ownership back if they change their mind.

Cash Deed of Gift
A Deed of Gift agreement can also be created to cover cash transfers. As with all Deed of Gift contracts the Donor will not retain any rights of ownership or repayment, differentiating these arrangements different from loan agreements.