What is a sales representative agreement?
A sales representative agreement is used when a company appoints an independent rep or rep agency to find customers and win orders for commission. The rep promotes the products and passes orders to the company; the company sets prices, decides which orders to accept, and sells to the customer directly. Getting the commission terms clear in writing is what prevents most disputes.
This template covers the products and territory, exclusive or non-exclusive appointment, and house accounts that earn no commission. You set the commission rate, whether it applies to orders the rep introduced or worked on or to every order from the territory, when commission is earned (on customer payment, invoice or order acceptance), whether it is paid monthly or quarterly, and how many days after the end of the agreement new orders from the rep's customers still earn commission. It also covers the rep's duties and lack of authority to bind the company, expenses, competing products, confidentiality and customer data, and chargebacks for refunds and unpaid invoices.
- Best for
- Manufacturers, wholesalers and B2B companies using commission-only reps
- Signed by
- The company and the independent rep (or the rep's agency)
- Commission
- Percentage of net sales value, paid monthly or quarterly with a statement
- Length
- About 3 pages, initialled on every page
When to Use a sales representative agreement
- A manufacturer appointing an independent rep agency to cover a region
- A company testing a new market with a commission-only rep before hiring staff
- A wholesaler adding reps for specific customer segments, such as restaurants or schools
- Putting an informal commission arrangement with a freelance seller in writing
- Setting house accounts so the company keeps its existing key customers
What You Fill In
20 blanks, then the name and email of each person who signs: company, sales representative.
1 The parties
- Company (your business)*
- Company address*
- Sales representative (person or agency)*
- Representative address*
2 Products and territory
- Start date*
- Products or services the rep sells*
- Territory or customer segment*
- The rep's appointment is* non-exclusive · exclusive
- House accounts (no commission)
3 Commission
- Commission rate (%)*
- Commission is paid on* orders from customers in the Territory that the Representative introduced or actively worked on · every order from a customer in the Territory, including orders the Company obtains directly
- Commission is earned when* the customer pays the Company for the order · the Company invoices the customer for the order · the Company accepts the order
- Commission is paid* monthly · quarterly
- Paid within (days after each period ends)*
- Currency*
- Commission on orders after the end (days)*
4 Other terms
- Expenses* The Representative pays its own expenses · The Company reimburses expenses it approves in writing beforehand
- Competing products* The Representative will not sell competing products during this Agreement · The Representative may sell other lines, including competing ones, if it tells the Company
- Notice to end the agreement (days)*
- Governing law*
5 Who signs
- Company signature and date, job title, initials on every page · Someone authorised to sign for the company appointing the rep.
- Sales representative signature and date, job title, initials on every page · The independent rep, or someone authorised to sign for the rep's agency.
What the sales representative agreement Covers
- Appointment
- The Representative's duties
- The Company's role
- Commission
- Expenses and taxes
- Independent contractor
- Other products
- Confidentiality
- Term and ending the Agreement
- General
Using the sales representative agreement, step by step
1 Define the products, territory and house accounts
Describe what the rep sells and the territory or customer segment. List any house accounts — customers the company keeps for itself — so there is no argument later about who earned a sale.
2 Choose what earns commission
With a non-exclusive appointment, commission usually applies only to orders the rep introduced or actively worked on. With an exclusive territory, many companies pay on every order from the territory, including direct sales.
3 Decide when commission is earned and paid
Commission can be earned when the customer pays, when you invoice, or when you accept the order. Pick monthly or quarterly payment and the number of days after each period. Refunds, credits and unpaid invoices are deducted from later payments.
4 Set expenses, competing lines and notice
Choose whether the rep pays its own expenses or you reimburse approved ones, whether competing lines are allowed, and the notice period. Then set how long after the end new orders from the rep's customers still earn commission.
Tips Before You Send It
- Some places have laws protecting commercial agents or sales reps — minimum notice, deadlines for paying commission, or compensation at the end. The agreement preserves those rights; check what applies before choosing a notice period.
- Tying commission to customer payment protects your cash flow; tying it to invoicing or order acceptance is more attractive to reps.
- Send the commission statement with every payment — the rep can check it against your records.
- Make sure the relationship stays genuinely independent. If you control the rep's hours and methods like an employee, local employment law may treat them as one.
- Keep the rep's authority clear with customers: the rep cannot agree prices or accept orders unless you authorise it in writing.
Sign It Online In Minutes
- Fill in the blanks. Names, dates and amounts go straight into the agreement — the preview shows exactly where.
- Name who signs. Tick “This is me” for your own part. VergeHR builds the PDF with every signature, date and initials box on the right line, and you can check or move anything before sending.
- Send it. Each signer gets a secure link and signs from any device — no account needed. The signed PDF, with an audit trail and a Certificate of Completion, is filed in Files and emailed to everyone.
Sales representative agreement: frequently asked questions
Is a sales representative an employee?
Not under this agreement — the rep is an independent contractor who decides how, when and where to work and pays their own taxes. Whether someone is legally an employee depends on how the relationship works in practice and on local law, not only on what the contract says.
Does the rep get commission after the agreement ends?
Yes, on orders accepted before the end date, and on orders received within the number of days you choose from customers the rep introduced or worked with, unless the agreement ended because of the rep's serious breach.
What is a house account?
A customer the company deals with directly and on which no commission is paid, usually because the relationship existed before the rep was appointed.
Can this agreement be signed electronically?
Yes. Electronic signatures are generally valid for ordinary business contracts in the US (ESIGN Act and UETA), the UK, the EU (eIDAS) and Canada. VergeHR keeps an audit trail and a Certificate of Completion with the signed PDF.