A sales commission agreement is a legal contract between the company and individual that outlines their specific commission plan (e.g., terms of payment, commission rates, quotas, etc.) — it's proof that both parties have agreed to the terms of incentive compensation.
To write a simple contract, title it clearly, identify all parties and specify terms (services or payments). Include an offer, acceptance, consideration, and intent. Add a signature and date for enforceability. Written contracts reduce disputes and offer better legal security than verbal ones.
An example of a formal agency agreement is a power of attorney, and the A in this case is called an attorney-in-fact. This relationship has two essential components: (1) the A has either express or implied authority to act for the P, & (2) the P controls the acts of the A.
A Commission Agreement is used when an individual or business, usually a salesperson, sells for or introduces clients to a third party. In return, they earn a commission for each sale or introduction made.