Commission contracts

All these documents are based upon the same model, and everything that is in the basic commission agreement appears in the other documents.

Commission payments

The standard commission agreement does not make many assumptions about the circumstances in which the commission will be paid. Accordingly it is a relatively flexible document. The fundamental payment obligation in the document reads as follows:

"In respect of each Trigger Event that occurs wholly or partially within the Term the Company will pay the Commission to the Partner in accordance with this clause."

The base amount might, for example, be the amount paid by a customer referred by the Partner to the Company.

This structure - using the concepts of a "Trigger Event" and a "Base Amount" and "Commission" payable on that base amount - allows the agreements to be used in lots of different circumstances.

Within a defined period following each trigger event, the company paying the commission must notify the other party that the trigger event has occurred and must confirm the amount of commission due in respect of the trigger event.

A standard invoicing clause is included. In the event of a late payment of commission, then the party owed the money may charge interest to the other at a defined amount, or alternatively may claim interest and statutory compensation under the Late Payment of Commercial Debts (Interest) Act 1998. If there is a dispute between the two parties over the commission due then the party with access to the records must grant the other party a rights to audit or have audited those records.

A selection of different limitations and exclusions of liability are included in the templates. These may protect one of the parties or both of the parties. They include a cap of liability in relation to any given event or series of related events. That cap may be set at the amount paid by the company to the partner under the agreement during a given period before the events giving rise to the claim.

Standard termination provisions are also included. There is an optional clause covering termination without cause upon notice. Another clause provides for termination in the event of a breach of the agreement. This clause may be adapted so that only material breaches give rise to rights of termination. Alternatively it may be adapted so that persisted breaches of the agreement give rise to rights of termination. There is also a right of termination on insolvency/bankruptcy.

Termination of the agreement does not affect either party’s accrued rights, and accordingly any commission due under the agreement at the date of termination will usually remain due thereafter, all else being equal.

Variations: confidentiality and non-solicitation

The commission and confidentiality agreement template contains all the provisions of the standard template. In addition, it includes confidentiality obligations. As drafted, the confidentiality obligations are mutual (i.e. apply to both parties). However, you can adapt the template so that the confidentiality obligations are unilateral.

Similarly, the commission and non-solicitation agreement template contains all the provisions of the standard template plus non-solicitation provisions, which again may be mutual or, with deletions, unilateral.

The commission, confidentiality and non-solicitation agreement template contains all the provisions of the other documents.