Commission Agreement for a Business Consultant

Explanatory Notes

Commission Agreement for a Business Consultant

This Commission Agreement for a Business Consultant is very simple and straightforward and is intended to cover a situation where an individual or company introduces business to a manufacturing company and the manufacturer pays commission on sales made as a result of each introduction.

This is not a formal Agency Agreement, but is more suited for a 'one-off' arrangement between someone who has good contacts in a particular area (called 'the Territory') and a company wishing to sell into that area.

We hope that the terms of the Commission Agreement for a Business Consultant are reasonably self-explanatory but a few comments by reference to the clauses are as follows:

1. APPOINTMENT

This confirms the appointment of the Business Consultant and defines the Territory which is covered by the Commission Agreement. If the Commission Agreement is not intended to be restricted to any particular Territory, then the wording would need to be adjusted accordingly.

2. DUTIES OF THE BUSINESS CONSULTANT

While this sets out the obligations of the Business Consultant, it's different from an Agency Agreement where, for example, the agent has clear obligations to develop its principal's business in the territory. Here the Business Consultant does have duties to try to find customers, but there will be no penalty if they fail to do so. The only incentive is that commission will become payable only if business is introduced to the Company.

3. COMMISSION

This clause in the Commission Agreement for a Business Consultant specifies the commission which is payable to the Business Consultant - it will normally be a percentage of the sale price.

As written, commission only becomes payable once payment is received by the Company. If, for example, a customer is found but fails to pay for the goods which it orders, the Business Consultant will not receive any commission.

4. DURATION

The length of the Commission Agreement for a Business Consultant is clearly a matter for negotiation between the Business Consultant and Company as is any arrangement with regard to its renewal. Here we have provided for an initial period, to be specified, with one automatic renewal period unless either the Company or the Business Consultant terminates prior to the renewal date.

In 4.2 we have made it clear that if the Commission Agreement for a Business Consultant is terminated, commission on sales which have arisen as a result of the Business Consultant's efforts (in a specified period prior to termination), will still be honoured.

5. AGENCY

This paragraph in the Commission Agreement for a Business Consultant clarifies the relationship between the parties and, in particular, makes it clear that the Business Consultant has no authority to make or enter into any commitments on behalf of the Company.

6. CONFIDENTIALITY

Commission arrangements are usually kept strictly confidential and this is reflected in the wording of the Commission Agreement for a Business Consultant.

7. MISCELLANEOUS

This Commission Agreement for a Business Consultant contains some standard 'boiler plate' clauses:

7.1 provides for any notices to be in writing and sets out a procedure for dealing with notices. 

7.2 establishes the ruling language of the Commission Agreement for a Business Consultant – i.e.  the language to be referred to if there is a dispute. This can be useful when a Commission Agreement is prepared in more than one language.

7.3 makes it clear that this Commission Agreement for a Business Consultant defines the deal between the Business Consultant and the Company and any previous arrangements are no longer effective. So, if, for example, there is an exchange of emails that set out some terms before the Commission Agreement is signed, you can no longer rely on those emails after signature; so if they are important, make sure their terms are incorporated in the Commission Agreement before you sign it.

8. LAW & DISPUTES

Since commission arrangements relating to a particular territory are likely to be international and cover more than one country, it's advisable to specify what country's law will govern the interpretation of the Commission Agreement for a Business Consultant, if there is a dispute.

Largely, because of the confidential nature of the transaction, an arbitration clause has been incorporated in the Commission Agreement for a Business Consultant. Arbitration awards are frequently enforced by the courts if a party against whom an award is made fails to honour that award.