A sales representative agreement defines the relationship between a business and its work force. A business’ sales force represents the business to the public. As a result, the people that represent the company and its products and services must be carefully selected, and an agreement needs to be carefully articulated in order to represent both parties’ interests. A written agreement ensures sales representatives promote the business’s products and services to the right people. For a South Carolina small business that is just starting out, an independent sales representative will likely be the best option because an independent sales representative is usually paid on a commission basis and there is no upfront investment. Thus, the independent sales representative is paid only when the company gets paid.
A sales representative agreement outlines the company’s rights and duties. It also defines the individuals and/or organizations that will represent the business’s products/services. It is important that the agreement be reduced to writing because oral agreements tend to be vague and hard to enforce, which leaves open the opportunity for a misunderstanding between the parties.
The terms of a sales representative agreement will depend on whether the business has in-house representatives or independent sales representatives. If the representatives are staff members employed by the business, then the business’s personnel policies will apply. If the agreement is between a company and an independent sales representative, however, the independent sale representative will not be bound by the business’ personnel policies and the independent sales representative is not subject to other duties implied-by-law. As such, an agreement with an independent sales representative needs to be comprehensive, specific, and needs to address all the significant aspects of the relationship.
This type of agreement should also specify whether the representative’s job is to procure sales, customers, or both. A sales procurement agreement means that the representative will get commission payments on sales that he or she actively helped achieve. A customer procurement arrangement, on the other hand, typically holds that the representative will receive commissions on all sales, regardless of whether the representative personally or actively achieved the sale, because the representative’s job is simply to find willing buyers.
Other terms that should be included in a sales representative agreement are: the geographic territory within which the representative can sell within; a description of the products the representative is assigned to sell; the representative’s post-sale responsibilities and conditions that impede her right to collect commission so that if the representative fails, for instance, to service and maintain his accounts, commission may not be paid; description of the commission rate the representative will be paid and a specific statement of how the commission will be calculated; payment terms; standards of conduct; and the termination of representation terms.