ContractsCounsel Logo

Sales Representative Agreement

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 7,494 reviews
Home Types of Contracts Sales Representative Agreement

Jump to Section

Need help with a legal contract?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

A sales representative agreement is a formal contractual agreement between an entity and a hired representative, establishing a working connection between them. The agreement details the representative and company's roles and responsibilities. This blog examines the main clauses, requirements, benefits, and challenges of such agreements in the United States.

Different Clauses in a Sales Representative Agreement

  • Confidentiality: A sales representative usually has access to confidential company data. A confidentiality clause in the contract covers trade secrets, client information, and other sensitive information.
  • Intellectual Property: The agreement should outline the sales representative's rights to use any trademarks, logos, or other intellectual property owned by the company and any limitations on its use. By doing this, the company's name and intellectual property are protected.
  • Term and Termination: The agreement should outline the length of the alliance and the circumstances under which any party may end it. It ensures precision and offers a way out if the partnership doesn't meet expectations.
  • Arbitration: The parties waive the contention that one of the preceding courts constitutes an inappropriate forum. The parties concur that the American Arbitration Association's Commercial Rules will determine the outcome of all controversies, claims, disputes, and matters arising from or related to the agreement.
  • Customers: Describe the kind of client the representative should seek. This might refer to a particular class of companies or an exclusive group of people. As exhibit B, join a list of the company's current clients to the agreement.
  • Compensation: The commission percentage applied to each listed sale should be entered, specifying the time frame within which the company is obligated to send commission payments to the representative. The duration for completion of this process can vary for different businesses, usually taking around 60 days, subject to the company's accounts receivable policies.
  • Property Return: This clause serves an essential purpose within the agreement by emphasizing the importance of returning the property after the contractual arrangement, preventing ambiguity or misunderstanding. While it may appear self-evident that returning the property after the agreement is essential, this clause explicitly highlights the importance of this requirement.
  • Indemnification: This provision shields both parties involved from the financial repercussions of any wrongdoing or misconduct by the other party. It promotes an equitable and balanced approach to risk management and liability allocation.
  • Assignment: It explains that the representative cannot delegate their rights and obligations under the agreement since the representative represents the company in a "personal" capacity. However, the company may only transfer its rights and responsibilities if it receives the representative's written consent.
  • No Implicit Renunciation: This explains that even if one party disobeys or permits the other to violate an obligation under the contract, it does not imply that the party is giving up the right to demand that the party comply with those responsibilities in the future.
  • Governing Law: It allows the parties to specify which laws will be applied to interpret the agreement in the event of a disagreement. This is not a venue provision; thus, the contained language cannot affect the location of a possible claim.
  • Counterparts and Digital Signatures: It states that all of the other parts of the agreement will be regarded as a single document, even if the parties sign it in different places or submit their signatures electronically (using fax machines or computers, for example).
  • No Conflict of Interest: The assurance that the representative does not now represent any other firm or product that competes with the firm. The Representative also states that it will offer a list of its current products/clients and update it as needed.
  • No Implied Waiver: It explains that just because one party ignores or permits the other to breach an agreement duty does not mean that the party waives future rights to demand the other party to fulfill those commitments.

Benefits of a Sales Representative Agreement

Below are the benefits of a sales representative agreement:

  • Increased Sales Reach: Businesses can access new markets or regions without creating a physical presence using sales representative agreements. This strategic approach increases their sales potential and broadens their customer base, opening doors to enhanced growth opportunities.
  • Expertise and Market Knowledge: Sales representatives often possess specialized industry knowledge and long-standing consumer relationships, cultivating strong connections within the market. Companies can use their insights and acquire a competitive edge using their experience.
  • Cost-Effective Sales Force: By opting to hire salespeople on a commission basis, companies can effectively manage the expenses associated with recruiting and training a dedicated sales force. This approach allows businesses to align costs with sales outcomes, resulting in higher savings on fixed expenditures.
  • Geographic Expansion: The sales representative agreement enables businesses to broaden their geographic reach without having to open physical offices or recruit employees on a full-time basis. By hiring them, businesses can access new markets and gain from local sales representatives' understanding of local tastes and cultural quirks.
Meet some lawyers on our platform

Morgan S.

6 projects on CC
View Profile

James H.

2 projects on CC
View Profile

Scott S.

41 projects on CC
View Profile

Ryenne S.

434 projects on CC
View Profile

Challenges of a Sales Representative Agreement

When you get into a sales representative arrangement, you will encounter numerous hurdles, including:

  • Misaligned Incentives: In some circumstances, there may be a misalignment between the company's objectives and the incentives given to sales representatives. To establish shared goals, it is essential to plan the incentive structure and performance measures properly.
  • Representational Image: Sales representatives serve as the company's public face while speaking with potential clients. Their activities or conduct may harm the brand image if they are at odds with the company's ideals or reputation.
  • Contractual Disputes: Conflicts between the corporation and the sales representative might result from ambiguities or disagreements over the terms of a contract. The likelihood of such problems can be reduced by clearly describing every part of the agreement.
  • Legal Compliance: In the United States, sales representative agreements must comply with several federal and state rules. This legal complexity may include stipulations relating to non-compete agreements, labor classification, minimum pay regulations, and independent contractor status.
  • Protection of Intellectual Property: It might be difficult to uphold secrecy and protect intellectual property rights. Sales representative agreements should have clauses defining ownership of any intellectual property produced during the term of the agreement, establishing non-disclosure duties, and safeguarding sensitive information.

Key Terms for Sales Representative Agreement

  • Parties: The contract must expressly specify the corporation (the principal) and the sales representative (the agent) as the parties. The legal link between the two is established, and clarity is ensured.
  • Territory: The agreement must specify the region or market sector where the sales representative is permitted to conduct business. Conflicts and uncertainty regarding jurisdiction are avoided as a result.
  • Products/Services: Includes information about the goods and services the sales representative will market or sell on the company's behalf. It ensures agreement between the parties and aids in setting expectations.
  • Compensation: Specifies the sales representative's compensation, including commission rates, payment schedules, and additional incentives or bonuses. The financial arrangements are explained in this section.
  • Governing Law and Jurisdiction: Determine the appropriate court jurisdiction and the applicable law that will govern any disputes or legal issues that arise from the agreement.

Final Thoughts on Sales Representative Agreement

A well-drafted sales representative agreement lays the groundwork for effective collaboration between businesses and sales representatives. Clarity is established, and both parties interests are aligned by outlining binding terms, obligations, and compensation plans. Although there are some issues to consider, the advantages of greater sales reach, industry knowledge, and a cost-effective sales force make it a beneficial arrangement for firms. It opens up opportunities for greater market penetration and a broader customer base, paving the way for productive collaboration and growth.

If you want free pricing proposals from vetted lawyers that are 60% less than typical law firms, click here to get started. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Sales Representative Agreement Lawyers

Diana M. on ContractsCounsel
View Diana
5.0 (1)
Member Since:
September 22, 2020

Diana M.

Patent Attorney
Free Consultation
Boca Raton, FL
11 Yrs Experience
Licensed in FL, TX
Florida Coastal School of Law

Diana is a registered patent attorney and licensed to practice law in Florida and in federal courts in Florida and in Texas. For nearly a decade, Diana has been known as the go-to brand builder, business protector, and rights negotiator. Diana works with individual inventors, startups, and small to medium-sized closely held business entities to build, protect, and leverage a robust intellectual property portfolio comprising patents, trademarks, copyrights, trade dress, and trade secrets.

Maxwell L. on ContractsCounsel
View Maxwell
4.9 (4)
Member Since:
September 24, 2020

Maxwell L.

Lawyer, Owner
Free Consultation
New Berlin, WI
12 Yrs Experience
Licensed in WI
Marquette University Law School (JD)

Firm rated best ADR firm for Wisconsin and won an award for cultural innovation in dispute resolution from acquisition international magazine in 2016 and it was rated "Best of Brookfield" by Best Businesses in 2015. Attorney Maxwell C. Livingston was rated 10 best in Labor & Employment Law by American Institute of Legal Counsel and 40 Under 40 by American Society of Legal Advocates for 2016; he also won 10 Best by American Institute of Family Law Attorneys. He is licensed in Wisconsin in all state and federal courts, and in the 7th Circuit Court of Appeals, wherein he won a landmark decision in McCray v. Wielke.

Blake L. on ContractsCounsel
View Blake
4.8 (2)
Member Since:
September 22, 2020

Blake L.

Free Consultation
Farmington Hills, MI
28 Yrs Experience
Licensed in MI
Wayne State University Law School

I am a sole practitioner who has been in practice for over 25 years. I have represented many small businesses during this time. Let me bring my expertise to your business.

Nicole R. on ContractsCounsel
View Nicole
Member Since:
September 2, 2020

Nicole R.

Attorney / Owner
Free Consultation
Mount Dora, FL
11 Yrs Experience
Licensed in FL
University of Miami School of Law

Full-service boutique law firm providing personalized services in business law, trademarks, and real estate closings/title work.

Maury B. on ContractsCounsel
View Maury
Member Since:
September 2, 2020

Maury B.

Senior Counsel
Free Consultation
Minneapolis, MN
32 Yrs Experience
Licensed in MN, WI
Mitchell Hamline School of Law

Respected, driven, ethical, and high energy legal and business professional with strong focus on litigation, contracts and compliance issues. Critical management experience includes client development, developing core initiatives, and forecasting risk in major corporations. Strong legal research, analytical and problem solving skills with demonstrated adaptability in a multifaceted legal practice including delivering high value results in a Fortune 10 environment. Core competencies include: Tactical and strategic legal direction and support to clients which includes contract negotiation, drafting and review, business planning, and a passion for relationship management. Excellent legal research, writing, analytical and problem solving skills including legal training and compliance with regulatory requirements and corporate policies. Coordinates with in-house legal and business resources for team building with excellent verbal communication skills, coaching, and leadership.

Brandon L. on ContractsCounsel
View Brandon
Member Since:
October 1, 2020

Brandon L.

Managing Partner, Attorney
Free Consultation
Dallas-Fort Worth
12 Yrs Experience
Licensed in TX
Juris Doctor – Pepperdine University School of Law – Malibu, California

Brandon is a Texas Super Lawyer®, meaning he is among the top 2.5% of attorneys in his state. He has designed his practice to provide a unique ecosystem of legal support services to business and entrepreneurs, derived from his background as a federal district law clerk, published biochemist, and industry lecturer. Brandon is fluent in Spanish, an Eagle Scout, and actively involved with the youth in his community. He loves advocating for his clients and thinks he may never choose to retire.

Richard E. on ContractsCounsel
View Richard
Member Since:
October 1, 2020

Richard E.

Senior Partner, Attorney
Free Consultation
Dallas-Fort Worth
15 Yrs Experience
Licensed in TX
Juris Doctor – University of LaVerne College of Law

Richard is a wizard at taking on bureaucracies and simply getting the job done. His clients value his straight-forward counsel and his ability to leverage a top-notch legal staff for efficient and effective results. Richard is a professional engineer, professor of law, and has been named among the top 2.5% of attorneys in Texas by the Super Lawyers®. When he is not driving results for his clients, Richard can be found with his small herd on his Texas homestead.

Find the best lawyer for your project

Browse Lawyers Now
Sales Representative Agreement lawyers by city
See All Sales Representative Agreement Lawyers
related contracts
See More Contracts
other helpful articles

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer


Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city