This is an agreement between a business principal and a sales agent. The agreement
creates an agency relationship and the sales agent works on a commission basis. This
document contains standard provisions, such as identifying which sales are subject to
commissions and a clause requiring the agent to furnish a fidelity bond to the principal.
This template agreement can be modified to fit the needs of the drafting parties. This
document is useful to small businesses seeking to hire a sales agent.
Agreement with Sales Agent
Agreement made on the (date), between (Name of Agent) of (street address,
city, state, zip code), referred to herein as Agent, and (Name of Principal), a
corporation organized and existing under the laws of the state of (name of state), with
its Principal office located at (street address, city, state, zip code), referred to herein
Whereas, Principal is a manufacturer of (type of Product) (the Product) and
desires to appoint Agent as a Sales Agent for the sale of Principal's Product; and
Whereas. Agent desires to accept such appointment and to perform all the
provisions of this Agreement;
Now, therefore, for and in consideration of the mutual covenants contained in this
Agreement, and other good and valuable consideration, the parties agree as follows:
1, Duration. The term of the agency created shall be (number of months or years)
beginning (date), unless sooner terminated.
2. Agent’s Best Efforts. Agent agrees to devote Agent's whole time and best
efforts to the business of Principal in the described territory under the direction of
Principal's officers or representatives, and to conform to the best of Agent's ability with
the rules, regulations and instructions of Principal now in force or that may be adopted
and mailed to Agent's address. Agent shall employ salespersons to assist Agent, on
such terms and conditions as Principal may require, as set forth in this Agreement.
3. Nondisclosure of Principal’s Affairs. Agent agrees to keep confidential such
information as Principal may from time to time impart to Agent regarding Principal's
business affairs and customers. Agent will not, in whole or in part, now or at any time,
disclose such information.
4. Assignment of Agent’s Invention. Agent agrees, in view of the confidential
information regarding Principal's business affairs, plans and necessities, that Agent will
be in a position to obtain from time to time, and in partial consideration of the
commissions agreed to be paid to Agent under this Agreement, that Agent, on demand,
will assign to Principal, or Principal's successors or assigns, any inventions or
improvements Agent may make during the agency with Principal that relate to
Principal's Product. Agent also will sign any papers and do any acts that may be needed
to secure to Principal, or Principal's successors or assigns, any rights relating to such
inventions and improvements, including patents in the United States and foreign
A. Agent, during the term of the Agreement, shall receive a commission from
the sale of Principal's Product sold for use in Agent's territory, whether sold by
Agent or by Principal, or others, except as provided in this Agreement.
B. Agent's commission on sales made pursuant to this Agreement shall be as
follows: (describe commission).
6. Sales Subject to Commissions. This Agreement shall apply to business
procured at the time of visits to Agent's territory by Principal's General Sales Manager,
and also to all business subsequently procured either by Agent, Principal's General
Sales Manager, or other representative of Principal, from customers previously worked
within (number) months from the date of the latest visit of Principal's General Sales
Manager or other representative.
7. When Commissions Paid.
A. Any commission to be received under this Agreement shall not be credited
to Agent's account on Principal's books until the purchaser has made settlement
in full with Principal, by cash.
B. Agent's account may be charged with the amount of any commission
previously paid to Agent or credited to Agent's account for the unpaid part of the
purchase price of Product or the unpaid part of any note given in payment.
C. When Principal repossesses a Product, Agent shall receive commission
only on the amount of money paid by purchaser prior to repossession.
8. Commission on Trade-Ins. Principal shall have the right to fix the amount to be
allowed for Products taken in exchange, and a commission will not be paid on the
amount so allowed.
9. Sales through other Channels. Agent waives any claim to a commission on
any sales made in Agent's territory other than through Principal's offices or regular sales
agencies when, in the opinion of Principal, the general conditions of the business in any
part of the United States necessitate the sale of Principal's Product through other sales
10. Sales in or from Other Territories
A. Agent agrees not to enter the territory of any other sales Agent of Principal
for the purpose of selling Principal's Product, or to endeavor, directly or indirectly,
to make sales of Principal's Product for use outside of Agent's territory. Should a
purchaser call on Agent voluntarily and purchase Principal's Product for use
outside of Agent's territory, Agent shall receive commissions as follows:
B. Agent further agrees that, when any other authorized sales agent of
Principal sells Principal's Product for use in Agent's territory, Agent's account
shall be credited with the regular commission, less the commission paid agent
making the sale.
11. Disputes on Commissions. Principal shall have the right to determine, in any
dispute arising between Agent and any other sales agent of Principal, the right to
commission on any sale, and Agent shall abide by and be bound by Principal's decision.
12. Limitation on Commission Claims. Agent waives all claim for commission on
sales of Principal's Product, whether made by Agent or others, and all other claims of
any nature whatever, if the claim is not made within (number of months or years) from
the date of termination of this Agreement.
13. Agreement not to Share Commission.
Under no circumstances, without permission of Principal, may Agent give any
part of Agent's commission to any assistant, local agent or other person to assist Agent
in making a sale.
14. Contents of Orders
A. All orders for Principal's Product shall be taken on printed forms furnished
by Principal, and all such orders shall be sent to Principal immediately after being
signed by purchasers. The orders shall contain all conditions and Agreements of
every nature whatsoever between the parties to the sale, it being agreed that
Principal shall not be responsible for promises or conditions not specified on the
orders. Principal's Product shall not be sold for more or less than the list price
established by Principal.
B. If Principal is compelled to make any concessions to customers or incur
any expense by reason of a violation of these requirements, the amount of the
expense may be charged to Agent's account.
15. Acceptance of Orders by Principal. Orders taken by Agent shall not be
binding until accepted by Principal. Principal reserves the right to reject any order when,
in the judgment of Principal, the Product ordered may not be suitable to the business of
16. Agent not to Compete. Agent, having agreed to devote Agent's whole time to
Principal's business, shall not purchase or deal in the Product on Agent's own account
in any way during the continuance of this Agreement. Agent will not engage, directly or
indirectly, either for Agent or as employee of any other party, in manufacturing, buying,
selling or dealing in the Product in the territory described, for a period of (number) of
months or years), after the termination of the agency created by this Agreement, without
the written consent of Principal.
17. Repairs and Maintenance of Product. Agent shall promptly and properly make
necessary repairs on Principal's Product in Agent's territory if such repairs can be made
by Agent, and to cooperate with and aid Principal in making all other such repairs in
Agent's territory, in such manner as Principal may direct.
18. Compromise and Collection of Accounts
A. Principal shall have full control of and discretion as to the collection,
adjustment or compromise of any or all accounts for Principal's Products sold by
Agent. If Principal requests Agent to make any collection, or to obtain possession
of Principal's Product or other property, whether the request relates to a sale
made by Agent or any Agent that preceded Agent in the territory, Agent shall do
B. Principal shall determine whether to take a lien on Principal's Product sold
by Agent. Principal shall not be liable to Agent for any loss of commission or
other claim, by reason of failure to take such lien, or by reason of any
compromise or adjustment of any account or accounts or notes for Products sold
by Agent, or any failure for any reason to collect any part of the account.
19. Remittals by Agent. Agent agrees to remit (weekly or monthly) to Principal, in
the manner prescribed by the treasurer, of Principal or to deposit (weekly or monthly)
in a bank or other financial institution designated by Principal's treasurer, all money,
checks and drafts received by Agent for Principal, including any received for repair parts
and supplies sold. In no event will Agent use any money collected for Principal to defray
the expenses of the agency, or for any other purpose, or deposit the funds in any bank
or other financial institution to Agent's own credit.
20. Agent’s Expenses. All expenses for traveling, entertainment, office, clerical,
office and equipment maintenance, and general selling expenses that may be incurred
by Agent in connection with this Agreement will be borne wholly by Agent. In no case
shall Principal be responsible or liable for such expenses.
21. Accounting on Termination.
A. Agent authorizes Principal, on termination of the agency created by this
Agreement, to pay any outstanding indebtedness, including amounts due Agent
and Agent's employees incurred in the management of the agency, and to
charge the amount to Agent's account. Principal shall not be bound to pay any
such indebtedness, unless Principal shall elect to do so. Payment of part of
Agent's indebtedness by Principal shall not raise any obligation on Principal's
part to pay the whole of the indebtedness. An assignment of Agent's account, or
any part of it, shall not be binding on Principal unless accepted in writing by
B. On termination of this Agreement, Principal shall proceed in the customary
manner to collect notes and open accounts for purchases of Principal's Product
sold by Agent and shall charge against Agent's account the commission
previously credited on such amounts of notes and accounts as are uncollected.
Principal also shall charge Agent's account with Agent's proportion of any
collection expense. This provision shall continue in force until a final account can
be stated; no money shall be due Agent under this Agreement after its
termination until the final account can be stated.
22. Objection To Accounting; Limitations. Agent agrees that all objections to
statements of account rendered by Principal are waived, unless written notice is given
by Agent and unless such notice reaches Principal within (number) days after rendition
of the statement by Principal.
Agent agrees to furnish Principal with a fidelity bond of $_____________, to be
issued by a responsible surety company and conditioned on the faithful performance of
Agent's duties in the agency created by this Agreement. All premiums on such bond
shall be paid by Agent.
24. Examination of Agent’s Accounts. Agent agrees that officers or authorized
representatives of Principal shall have, on demand, access to and the right to examine
and make copies of all books of accounts, vouchers and papers of Agent, in order to
ascertain whether the business of Agent is being conducted in a manner satisfactory to
25. Disposition of Products; Consignment
A. Agent agrees, on demand, to account for and deliver to Principal, in good
condition, all Products charged to Agent's consignment account. If Agent fails to
deliver any Product, the Product may be charged to Agent's account at list price,
if Principal so elects, but nothing contained in this Agreement shall prevent
Principal from exercising other legal remedies to recover possession of such
B. If any of Principal's Products shall have been kept on consignment by
Agent for such period of time that they have become unsaleable as new,
Principal may order their return to the factory, in which event the freight charges
from Agent's office to the factory shall be paid by Agent.
C. Agent agrees not to loan, or permit to be loaned, any new or second-hand
Products. Principal shall furnish suitable Products required for such purpose.
26. Insurance Premiums; Taxes. Principal shall insure against loss by fire all
Products delivered on consignment to Agent, charging the premium paid for the
insurance to Agent's account. Agent shall pay all personal property taxes levied on
consigned Products, or shall pay such tax as may be levied in lieu of a personal
27. Compliance with Laws. Agent agrees, for the benefit of Agent's employees and
subagents, to comply in all respects with the workers' compensation laws of any state or
states of which Agent's territory may be a part, and to pay the premiums and other costs
and expenses incident to such coverage.
28. Customer List; Sales Calls
A. Agent agrees to keep a list of probable purchasers, and also a list of
users, of Principal's Products in Agent's territory. Both lists shall show the name,
nature and address of each business concern listed. The user's list shall also
show the style and factory number of Principal's Product in use.
B. Agent agrees to send to Principal, on the form furnished by Principal, a list
of all persons called on by Agent or Agent's employees in connection with
Principal's business. The list shall show the name, nature and address of each
business concern called on, and the object and results of the call.
29. Depreciation of Agency. The office furniture, personal property and fixtures
used by Agent in Principal's business shall be invoiced and appraised at least once
each year by Agent and a representative of Principal, and a deduction of not less than
______% per year shall be made to cover wear and tear in ordinary depreciation.
30. Purchase of Agency Property. Principal shall have an option of purchase of all
or any part of the supplies, repair parts, vehicles and sundries in stock or on hand at the
time of termination of the agency, at the current price, less proper deductions for
obsolescence and depreciation, if any. Such price shall be paid to Agent or credited on
Agent's account with Principal, as Principal may elect. In the case of exercise of the
option, the property shall be at once turned over to Principal.
31. Employment of Subagents. Agent agrees not to employ any salespersons to
assist in the agency, except under written Agreement by the terms of which Principal
shall be released from all liability for any indebtedness from Agent to such
salespersons. Agent agrees not to employ any person until Agent has supplied Principal
with full particulars regarding such person, on the form furnished by Principal, giving the
person's name, record, previous occupation, etc., and until Principal's assent to such
employment has been received.
32. Modification and Termination
Principal at any time may alter and change the boundaries and territory covered
by this agency Agreement. The agency created by this Agreement may be terminated
by either party by written notice mailed or delivered to the last known address of the
other party. This Agreement covers all Agreements between Agent and Principal
relating to the employment of Agent for the handling of Principal's Product.
33. Severability. The invalidity of any portion of this Agreement will not and shall
not be deemed to affect the validity of any other provision. If any provision of this
Agreement is held to be invalid, the parties agree that the remaining provisions shall be
deemed to be in full force and effect as if they had been executed by both parties
subsequent to the expungement of the invalid provision.
34. No Waiver. The failure of either party to this Agreement to insist upon the
performance of any of the terms and conditions of this Agreement, or the waiver of any
breach of any of the terms and conditions of this Agreement, shall not be construed as
subsequently waiving any such terms and conditions, but the same shall continue and
remain in full force and effect as if no such forbearance or waiver had occurred.
35. Governing Law. This Agreement shall be governed by, construed, and enforced
in accordance with the laws of the State of (name of state).
36. Notices. Unless provided herein to the contrary, any notice provided for or
concerning this Agreement shall be in writing and shall be deemed sufficiently given
when sent by certified or registered mail if sent to the respective address of each party
as set forth at the beginning of this Agreement.
37. Attorney’s Fees. In the event that any lawsuit is filed in relation to this
Agreement, the unsuccessful party in the action shall pay to the successful party, in
addition to all the sums that either party may be called on to pay, a reasonable sum for
the successful party's attorney fees.
38. Mandatory Arbitration. Notwithstanding the foregoing, and anything herein to
the contrary, any dispute under this Agreement shall be required to be resolved by
binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator,
each party shall select one arbitrator and both arbitrators shall then select a third. The
third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed
by the rules of the American Arbitration Association then in force and effect.
39. Entire Agreement. This Agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this Agreement shall not be binding upon either party except to
the extent incorporated in this Agreement.
40. Assignment of Rights. The rights of each party under this Agreement are
personal to that party and may not be assigned or transferred to any other person, firm,
corporation, or other entity without the prior, express, and written consent of the other
41. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute but one and the same instrument.
WITNESS our signatures as of the day and date first above stated.
(Name of Principal)
(Printed Name of Agent) (Printed Name & Office in Corporation)
(Signature of Agent) (Signature of Officer)
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