Sales Rep Agreement
This
Agreement ("Agreement") is made and effective on by and between
____________________________________________________________ ("Rep")
and
_________________________________________________ ("Company").
In
consideration of the mutual promises contained herein, the parties agree as
follows:
1.
Definitions.
As
used herein, the following terms shall have the meanings set forth below:
A. "Products" shall mean the
following of Company's products to be sold by Rep:
__________________________________________________________________.
B. "Territory" shall mean the
following described geographic area and/or specific accounts:
2. Appointment.
Company hereby appoints Rep as its sales rep for the
Products in the Territory, and Rep hereby accepts such appointment. Rep's sole authority shall be to solicit
orders for the Products in the Territory in accordance with the terms of this
Agreement. Rep shall not have the
authority to make any commitments whatsoever on behalf of Company, and be fully
responsible for keeping his or her customers duly informed of this limit on
Rep’s authority to make agreements on behalf of the Company with the customer.
3.
General Duties.
Rep
shall use its best efforts to promote the Products and maximize the sale of the
Products in the Territory. Rep shall
also provide reasonable assistance to Company in promotional activities in the
Territory such as trade shows, product presentations, sales calls and other
activities of Company with respect to the Products. Rep shall also provide reasonable "after
sale" support to Product purchasers and generally perform such sales
related activities as are reasonable to promote the Products and the goodwill
of Company in the Territory, in the line of business Company is in. Rep shall report weekly to Company concerning
sales of the Products and competitive promotional ad pricing activities. Rep will devote adequate time and effort to
perform its obligations. Rep shall
neither advertise the Products outside the Territory nor solicit sales from
purchasers located outside the Territory without the prior written consent of
the Company.
4.
Reserved Rights.
Company
reserves the right to solicit orders directly from and sell directly to any end
users or other retail buyers within the Territory. Rep's task is to solicit orders from all
potential wholesale customers in the Territory including original equipment
manufacturers, distributors, resellers, dealers, value-added resellers,
telemarketing companies and retail distribution chains, unless agreed otherwise
else in this agreement.
5.
Conflict of Interest.
Rep warrants to Company that it does not currently
represent or promote any lines or products that compete with the Products. During the term of this Agreement, Rep shall
not represent, promote or otherwise try to sell within the Territory any lines
or products that, in Company's judgment, compete with the Products covered by
this Agreement. Rep shall provide
Company with a list of the companies and products that it currently represents
and shall notify Company in writing of any new companies and products at such
time as its promotion of those new companies and products commence.
6.
Independent Contractor.
Rep is an independent contractor, and nothing contained in
this Agreement shall be construed to (i) give either party the power to direct
and control the day-to-day activities of the other, (ii) constitute the parties
as partners, joint venturers, co-owners or otherwise, or (iii) allow Rep to
create or assume any obligation on behalf of Company for any purpose
whatsoever. Rep is not an employee of
Company and is not entitled to any employee benefits. Rep shall be responsible for paying all
income taxes and other taxes charged to Rep on amounts earned hereunder. All financial and other obligations
associated with Rep's business are the sole responsibility of Rep.
7. Indemnification
by Rep.
Rep
shall indemnify and hold Company free and harmless from any and all claims,
damages or lawsuits (including reasonable attorneys' fees) arising out of
negligence or malfeasant acts of Rep, its employees or its agents.
8.
Indemnification by Company.
Company
shall indemnify and hold Rep free and harmless from any and all claims, damages
or lawsuits (including reasonable attorneys' fees) arising out of defects in
the Products caused by Company or failure of Company to provide any products to
a customer that has properly ordered through Rep.
9. Commission.
Sole Compensation. Rep's sole compensation under the terms of
this Agreement shall
be a commission computed as follows:
____________________________ (suggestion:
a percentage of actual payments received by
Company; this eliminates lots of extra
language; is very clear; can be audited
simply).
Basis
of Commission. The Commission shall apply to all orders
solicited by Rep from the Territory that have been accepted by Company and for
which shipment has occurred. No
commissions shall be paid on (i) orders from outside the Territory (even if Rep
receives the initial inquiry from outside the Territory) unless otherwise
agreed in writing by Company.
Commissions shall be computed on the net amount paid by customer.
Time of Payment. The commission on a given order shall be due
and payable when paid by the customer and be due within 5 days after such
payment is received.
Commission
Charge-Back. Company shall have the absolute right to set
forth cash discounts, to make such allowances and adjustments to accept such
returns from its customers, and to write off as bad debts such overdue customer
accounts as it deems advisable. In each
such case Company shall charge back to Rep's account any amounts previously
paid or credited to it with respect to such cash discounts, allowances,
adjustments, return or bad debts.
However, Company agrees that the amount of any cash discount provided to
a customer and charged back to Rep shall not exceed of the sales price. Payment to Rep upon receipt of customer
payments and for the percentage agreed upon eliminates most of these areas for
dispute, which the parties acknowledge herein.
Annual Inspection of
Records. Rep shall have the right, at its own expense
and not more than once per year, to inspect at reasonable times Company's
relevant accounting records to verify the accuracy of commissions paid by
Company under the terms of this Agreement.
If the audit correctly reveals that Company has underpaid Rep by ten
percent (IO%) or more, then Company shall reimburse Rep for the cost of the
audit, in addition to the amount of underpayment. Unless otherwise stipulated, this date shall
be January 31 of each year. In no event
shall an audit be permitted for more than the past 12 months. Therefore, any amounts possibly due prior to
this year and one day, are not subject to review for any reason including
fraudulent misrepresentation or any other such claim Rep might make.
10. Sale of the
Products.
Prices and Terms of
Sale. Company shall provide Rep with copies of its
current price lists, delivery schedules, and standard terms and conditions of
sale, as established from time to time.
Rep shall quote to customers only those authorized prices, delivery
schedules, and terms and conditions, and modify, add to or discontinue Products
following written notice to Rep. Each order shall be controlled by the prices,
delivery schedules, and terms and conditions in effect at the time the order is
accepted, and all quotations by Reps shall contain a statement to that effect.
Quotations. Reps shall promptly furnish to Company copies
of all quotations submitted to customers.
Each quotation shall accurately reflect the terms of this Agreement.
Orders. All orders for the Products shall be in
writing, and the originals shall be submitted to Company. All orders shall be sent directly from the
customer to the Company not to the Rep for forwarding to the Company.
Acceptance. All orders obtained by Rep shall be subject
to final acceptance by Company at its principal office and all quotations by
Reps shall contain a statement to that effect.
Rep shall have no authority to make any acceptance or delivery
commitments to customers. Company
specifically reserves the right to reject any order or any part thereof for any
reason.
Credit
Approval. Company shall have the sole right of credit
approval or credit refusal for customers in all cases, with or without cause.
Collection. Full responsibility for collection from
customers rests with Company, provided that Rep shall at Company's request
assist in such collection efforts.
Inquiries
from Outside the Territory. Rep shall promptly
submit to Company, for Company's attention and handling, the originals of all
inquiries received by Rep from customers outside the Territory.
11. Term and
Termination.
A. Term.
This Agreement shall commence on
_____________________and continue for one year thereafter, unless
terminated earlier as provided herein.
This Agreement shall continue until terminated upon at least 30 Days
written notice by either party. If not
terminated during the first year, this Agreement shall continue until one party
or the other terminates the Agreement with 30 Days written notice.
B.
Return of Materials. All of
Company's trademarks, trade names, patents, copyrights, designs, drawings,
formulas or other data, photographs, demonstrators, literature, and sales aids
of every kind shall remain the property of Company. Within 10 days after the termination of this
Agreement, Rep shall return all such items to company at Rep's expense. Rep shall not make or retain any copies of
any confidential items or information that may have been entrusted to it. Effective upon the termination of this
Agreement, Rep shall cease to use all trademarks, marks and trade name of
Company.
12.
Limitation of Liability.
Upon
termination by either party in accordance with any of the provisions of this
Agreement, neither party shall be liable to the other, because of the
termination for compensation, reimbursement or damages on account of the loss
of prospective profits or anticipated sales or on account of expenditures,
investments, leases or commitments in connection with the business or goodwill
of Company or Rep. Company's sole liability under the terms of this Agreement
shall be for any unpaid commissions.
13.
Confidentiality.
Rep
acknowledges that by reason of its relationship to Company hereunder it will
have access to certain information and materials concerning Company's business
plans, customers, technology, and products that is confidential and of
substantial value to Company, which value would be impaired if such information
were disclosed to third parties. Rep
agrees that it shall not use in any way for its own account or the account of
any third party, nor disclose to any third party, any such confidential
information revealed to it by Company.
Rep shall not publish any technical description of the Products beyond
the description published by Company. In
the event of termination of this Agreement, there shall be no use or disclosure
by Rep of any confidential information of Company, and Rep shall not manufacture
or have manufactured any devices, components or assemblies utilizing Company's
patents, inventions, copyrights, know-how or trade secrets.
14.
Notices.
Any notices required or permitted by this Agreement shall
be deemed given if sent by certified mail, postage prepaid, return receipt
requested or by recognized an over night delivery service such as FedEx:
If
to Company: _________________________________________________________.
(Name
& Address)
If
to Rep: ___________________________________________________________.
(Name
& Address)
15. No Waiver.
The
waiver or failure of either party to exercise in any respect any right provided
in this agreement shall not be deemed a waiver of any other right or remedy to
which the party may be entitled.
16. Entirety
of Agreement.
The terms and conditions set forth herein constitute the
entire agreement between the parties and supersede any communications or
previous agreements with respect to the subject matter of this Agreement. There are no written or oral understandings
directly or indirectly related to this Agreement that are not set forth
herein. No change can be made to this
Agreement other than in writing and signed by both parties.
17. Governing Law.
This
Agreement shall be construed and enforced according to the laws of the State of
____________________ and any dispute under this Agreement must be brought in
this venue and no other.
18. Headings in this Agreement
The
headings in this Agreement are for convenience only, confirm no rights or
obligations in either party, and do not alter any terms of this Agreement.
19. Severability.
If
any term of this Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, then this Agreement, including all of the remaining
terms, will remain in full force and effect as if such invalid or unenforceable
term had never been included.
In
Witness whereof, the parties have executed this Agreement as of the date
first written above.
_________________________ _______________________
Company Rep
Sales Rep Agreement
Review List
This
review list is provided to inform you about the document in question and assist
you in its preparation.
1. The Sales Rep Agreement is used only to
appoint an independent sales rep. If you
will hire a person as a full time sales executive, see the Sales Employment
Agreement.
2. This
Agreement, as written, provides for termination in 30 days. This is an important clause to protect the
Company from having to retain an ineffective Rep. In addition the document
provides for paying the Rep a percentage based on receipts, not a more
complicated formula; provides for payment after receipt so the Company is not
financing the Rep commission; and provides for only one back year of auditing
to prevent a potential lawsuit from spiraling out of control. The venue for litigation is important and
should always be in the Company’s home state.
3. The rep is treated as an independent
contractor in this Agreement, not as an employee, and this clause should be
protected because the distinction is very important for the Company. This means the sales rep is not eligible to
receive employee benefits and is responsible for his or her own income, social
security, and Medicare taxes, among other things. Request the Rep fill out a W-9 IRS Form (one
is on this Legal Forms CD), which provides for documentation of the Rep’s
status. The IRS has a long history of
allowing Reps to be independent contractors.
This category has well-established precedents, unlike other categories,
as long as the Rep is not based out of your corporate office. Even under these circumstances, a Rep can be
treated as an independent contractor; but the “bar” is higher to meet the IRS’
standards.
4. Although IRS rules do not vary
state-to-state, state employment and contractor laws and rules do. Therefore, before using this document, you
would be well advised to seek legal counsel about its appropriateness.
5. Print two copies of the Sales Rep Agreement,
one for each party. Both parties should
sign each copy so that both can have an original copy. You are advised to keep an extra copy in a
folder containing all Rep contracts.
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