How to Write a Commission Sales Agent Agreement

A handshake is not enough

Whether you are engaging one agent or one hundred, every commission only sales relationship needs a written agreement. It protects you, it protects the agent, and it prevents the disagreements that inevitably arise when money is involved.

You do not need a 30 page legal document. But you do need clarity on the key terms that govern the relationship.

Essential clauses to include

Scope of work

Define exactly what the agent is being engaged to do. Which products can they sell? Which markets or territories are they authorised to operate in? What activities are expected (prospecting, presenting, closing) and which are not (customer support, fulfilment)?

Commission structure

This is the core of the agreement. Spell out the exact commission rate or formula, when commissions are earned (at sale, at payment, at delivery), the payment schedule, how returns or refunds affect commissions, and whether commissions continue on renewals.

Term and termination

Define how long the agreement lasts and how either party can end it. Include notice periods, conditions for immediate termination (fraud, misconduct), and what happens to pending deals and commissions when the relationship ends.

Intellectual property

Clarify that your sales materials, customer data, and branding remain your property. The agent has a licence to use them during the term of the agreement and must return or destroy them when it ends.

Confidentiality

Agents will learn about your business, pricing, customers, and strategy. Include a confidentiality clause that survives the end of the agreement.

Non solicitation

Consider whether you want to prevent agents from poaching your customers or other agents after the relationship ends. Keep any restrictions reasonable in scope and duration.

Contractor status

Explicitly state that the agent is an independent contractor, not an employee. Include the key indicators: they control their own hours, use their own equipment, can work for others, and bear their own business expenses.

Dispute resolution

Define how disagreements will be resolved. Mediation before litigation saves both parties time and money.

Common mistakes to avoid

Do not use a generic template without customising it for your situation. Do not include employee style obligations (fixed hours, exclusive engagement) in a contractor agreement. Do not leave commission calculations ambiguous. Do not forget to address what happens when the agreement ends.

Get it reviewed

Have a commercial lawyer review your agreement before you use it. The cost of a legal review is minimal compared to the cost of a dispute. If you are using Zepys, the platform provides a framework for agent engagement terms, but supplementing with your own agreement is always good practice.