Commission agreement

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An agreement under which one party agrees to make commission payments to the other party.

Author: Alasdair Taylor
Updated: 11 May 2023
Length: 7 pages
Notes: 5 pages
Format: MS Word (.DOCX)

This form of agreement is designed to be used to regulate the payment of commission by one contracting party to the other party. The obligation to pay commission may arise out of the provision of a service or some other act or event. For instance, it may arise out of the introduction of a customer.

The second party is entitled to a percentage share calculated from an agreed base amount. The performance of the services or other event triggers both parties' primary legal obligations and responsibilities under the agreement.

The document will help the parties by providing a mechanism for identifying entitlement to commission, calculating the percentage and paying the commission. It also expressly covers the assessment of interest where commission payment is overdue. Failure to properly address these types of issue in commission-driven business relationships is a common cause of disputes.

In the event of a dispute, the right to audit can be invoked at the cost of the party requiring the audit, which will be the party entitled to commission. If the result of the audit exposes an underpayment of commission, the party at fault is required to pay the reasonable cost of the audit.

The warranties given by the parties are minimal, as this type of agreement does not usually call for terms containing extensive commitments in respect of particular facts or conditions. Warranties and other terms are sometimes implied into a contract, but this agreement seeks to exclude these to the maximum extent allowed by law.

If the agreement is meant to remain in effect for a given length of time, this should be stated so that there is certainty in respect of when it ends. This may be preferable to having to serve notice and then dealing with disagreements about whether notice was properly served or indeed valid. Certain provisions of the agreement will continue in effect after the agreement has terminated.

It would not be appropriate for an employer to use this form of agreement for the payment of commission to employees. Agreements relating to employment matters will include explicit employment law-related provisions.

This agreement does not deal with confidentiality and non-compete matters in general. Nor does it cover matters of non-solicitation, which may be relevant depending on the nature of the services. We do, however, supply a number of templates covering these matters.

The contract is governed by English law and subject to the jurisdiction of English courts; you should consult a suitably qualified lawyer if it is your intention to change this provision.

  1. Definitions
  2. Term
  3. Commission
  4. Interest
  5. Audit
  6. Warranties
  7. Termination
  8. Effects of termination
  9. Notices
  10. General
  11. Interpretation

What happens if there is a dispute between the parties concerning the payment of commission?

The agreement include a short-form clause covering disputes about commission. If a dispute arises, then the party receiving commission has a right to audit the records of the other party insofar as such records relate to the calculation and payment of commission. If an audit reveals an underpayment, that other party has to pay the costs of the audit. The frequency of audits may be limited, for example to one per year.

How can the agreement be terminated?

The template incorporates a standard termination clause, with three separate sections. The first covers termination upon notice "for convenience" - i.e. where neither party is at fault. The second covers termination upon breach. The third covers termination on insolvency (or bankruptcy).

Does this template include a notices provision? I can't see one in the list of contents.

Yes, it is included at the start of the "general" section. It is our standard notices clause, providing for a range of possible notice mechanisms: personal delivery, courier, post, fax and email.

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A copy of this commission agreement is included in each of these packs:

Average rating (3 Reviews):  
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Commission agreement
12 May 2023  | 

Fits like a glove, technical writing 100%.

Commission Agreement
22 April 2019  | 

It is user friendly and complete.


Thanks for the feedback Diego.

Legal Protection
03 February 2019  | 

Great legal document which can be edited and used to guarantee that you get your commission. It never hurts to get a legal binding agreement for anything. Alasdair was very helpful in answering my queries. Bottom line, this is a general document which can be editied and tailored to you. Everything is very straightforward and there is a guideline for editing purposes inside the document. I recommend seqlegal to anyone that is seeking for a fair price on legal documents.


Thanks Michael - I really appreciate the feedback.