What is Sales Representative Agreement Drafting?
A sales representative agreement is a legal contract between a business and an individual or other company hired to promote the business’s products or services.
It has to clearly explain how parties will work, such as regarding performance and sales territories, to prevent disputes.
Read the rest of this article to explore sales representative agreements in detail, such as what core terms to include in it and how a lawyer can assist you with the process of writing it.
What Key Terms are in a Sales Representative Agreement?
A sales representative agreement should contain core components, such as:
- Parties. Identify both parties involved in the agreement for clarity.
- Authority scope. Explain the products and services the representative can sell and if they have exclusive rights.
- Territory. Define the location or geographic area where the representative can work.
- Compensation. State commission percentages and other payment terms, such as expense reimbursements.
- Term and termination. The agreement must state how long it will last and what notice periods are required by parties who wish to end the contract early.
- Confidentiality. To protect sensitive information shared during the working arrangement, the agreement must specify how it can be safeguarded.
- Post-termination commission. You should specify if the sales representative will continue to earn commission after the contract ends.
- Dispute resolution. To protect both parties, the agreement should state how conflicts can be resolved, such as via mediation, arbitration, or litigation.
How Do You Draft a Sales Representative Agreement?
When drafting a sales representative agreement, there are important things to consider so that it’s clear and specific.
Describe the Scope of Duties
Include a clearly defined clause that outlines the sales representative's responsibilities, such as promoting products or services, generating leads, and even providing customer service. These tasks must be explained so that there’s no confusion or misunderstandings.
It’s in your best interest to include what the sales representative isn’t allowed to do, such as making promises on behalf of the company without gaining its approval.
Include Non-Monetary Benefits
There might be compensation beyond monetary benefits. This could include retirement plan contributions or reimbursed expenses linked to sales activity, such as travel.
For reimbursements, the agreement should clarify what expenses qualify and if prior approval or proof is needed.
Clarify the Territory
Specify the territory in which the sales representative is allowed to operate. This helps to clarify exactly where they can sell the company’s goods or services, as well as ensure they can meet the current market’s demands. By stating the territory, you can also prevent disputes over issues such as commission and ownership.
Set Performance Metrics
The agreement should state minimum sales targets for the sales representative to meet, along with timeframes. It’s equally important for the company to be able to monitor the representative’s progress and how they can navigate a situation in which the representative doesn’t meet the outlined targets.
Consider a Non-Compete Clause
It can be beneficial to include a non-compete clause in your sales representative agreement if the company wants to protect its competitive position. This clause serves to restrict the sales representative from working for specific competitors or conducting other competing activities.
Since non-competes could be subject to strict requirements, a lawyer should be consulted to help you include a legally sound and fair provision.
Should You Hire a Lawyer for Sales Representative Agreement Drafting?
It’s worth hiring a lawyer to draft your sales representative agreement for you. Here’s a rundown of what they can do to help you through the process.
- Accurately defining the parties and scope, such as by stating the sales representative’s territories.
- Describing the representative’s duties and responsibilities, such as sales targets and compliance obligations.
- Setting compensation and commissions so that there’s no confusion over how or when payments are earned.
- Clarifying how confidential information can be protected. Lawyers will include solid provisions, such as how to protect trade secrets and trademarks.
- Including legal obligations. A lawyer will ensure your agreement complies with all relevant laws and other obligations to protect you from legal disputes.
- Reviewing a sales representative agreement that you’ve drafted, or used a generic template to create. A lawyer will conduct an in-depth examination of the contract to ensure it contains essential information that’s specific to your working relationship.
Where to Find a Lawyer to Draft a Sales Representative Agreement
If you want to hire a lawyer to draft a sales representative agreement, the process shouldn’t be time-consuming or stressful. Online legal platforms such as ContractsCounsel can help you to access qualified lawyers who are experienced and have expertise in contract drafting.
ContractsCounsel is one of the largest online legal marketplaces that connects you with a network of lawyers who have been vetted. To request that a lawyer on the platform drafts your sales representative agreement, here are the easy steps to follow.
- Go to the ContractsCounsel marketplace, where it’s free to post your request or project.
- Try to mention a few details to help you find the most suitable lawyer, such as the type of sales activities required under the agreement.
- Receive multiple bids from lawyers on the platform who have the experience to help you.
- Review the lawyers’ profiles. ContractsCounsel provides lawyer data, such as the lawyers’ location, client ratings for previous projects, expertise, and credentials. This helps you to choose the right lawyer.
- Connect with a lawyer you think is best suited to your requirements and hire them to draft your sales representative agreement for a flat fee.