Commercial Representation Agreement Ready-to-Use Template
This commercial representation agreement template helps a business appoint an independent representative to promote, solicit, or negotiate sales within an agreed territory. It covers commissions, authority limits, reporting, confidentiality, expenses, duration, termination, and applicable law, helping the parties set clear expectations before starting their commercial relationship.
A commercial representation agreement sets out the terms under which an independent representative promotes, solicits, or negotiates business on behalf of a company. It is useful when a business wants to expand into a market or territory without hiring the representative as an employee. A clear written agreement helps define authority, commission entitlement, reporting duties, and the circumstances in which the relationship may end. The parties should adapt the template to the applicable law and the specific commercial arrangement.
What is a commercial representation agreement?
A commercial representation agreement is a contract between a principal, such as a manufacturer, supplier, or service provider, and a representative who seeks customers or business opportunities for that principal. The representative generally acts independently and is usually paid through commission, although other payment structures may be agreed.
The agreement should make clear whether the representative may only introduce customers, solicit orders, negotiate terms, or conclude contracts in the principal's name. This distinction is important because it affects authority, liability, customer expectations, and possible statutory protections.
Representation versus employment
An independent commercial representative is not automatically an employee. The actual working relationship, including control over working hours, exclusivity, equipment, and integration into the business, may influence legal classification regardless of the contract label.
Key clauses to include
The document should identify both parties accurately and describe the products, services, territory, and customer categories covered. It should also state whether the appointment is exclusive, non-exclusive, or limited to specified accounts.
- Scope of the representative's authority and any approval requirements.
- Territory, target customers, products, and excluded accounts.
- Commission rate, calculation basis, payment date, and clawback rules.
- Confidentiality, intellectual property, and use of marketing materials.
- Term, renewal, notice, and termination rights.
Authority to bind the principal
Many representatives are permitted to promote products and collect orders but not to sign contracts or accept payments for the principal. If authority is granted, the agreement should define its exact limits and any value thresholds or prior-approval requirements.
Essential information at a glance
The following table highlights common variables that should be completed carefully before the agreement is signed. Leaving these points vague can create disputes over payment, territory, or termination.
| Document field | Purpose | Common error |
|---|---|---|
| Territory | Defines the geographical or customer market assigned. | Using broad wording without excluding existing accounts. |
| Commission basis | States whether commission is based on orders, invoices, or collected revenue. | Failing to specify treatment of returns, discounts, and taxes. |
| Authority | Limits what the representative can promise or sign. | Assuming sales promotion includes signing authority. |
| Term and notice | Sets the relationship duration and exit process. | Omitting notice periods and post-termination commissions. |
| Expenses | Allocates travel, marketing, and customer meeting costs. | Not requiring written approval for exceptional expenses. |
Editable template
Document template
COMMERCIAL REPRESENTATION AGREEMENT
Place: ____________________
Date: ____________________
Between:
Principal: ____________________, a company/individual organised or resident under the laws of ____________________, with registered address at ____________________, registration or identification number ____________________, represented by ____________________.
Representative: ____________________, a company/individual organised or resident under the laws of ____________________, with registered address at ____________________, registration or identification number ____________________, represented by ____________________.
The Principal and the Representative are collectively referred to as the “Parties”.
| Variable | Agreed details |
|---|---|
| Products / services | ____________________ |
| Territory / customer accounts | ____________________ |
| Appointment type | Exclusive / Non-exclusive / Other: ____________________ |
| Commission rate and basis | ____________________ |
| Commission payment date | ____________________ |
| Agreement term | From ____________________ to ____________________ |
| Notice period | ____________________ |
| Governing law | ____________________ |
- Appointment. The Principal appoints the Representative to promote and solicit orders for the Products / Services within the Territory described above, subject to the terms of this Agreement.
- Independent status. The Representative acts as an independent contractor and has no authority to bind the Principal, sign contracts, alter prices, grant discounts, make warranties, or collect payments unless expressly authorised in writing by the Principal.
- Representative duties. The Representative shall use reasonable commercial efforts to promote the Products / Services, provide periodic activity reports, comply with applicable laws, and protect the Principal's confidential information.
- Principal duties. The Principal shall provide reasonable product information and marketing materials, process orders at its discretion, notify the Representative of accepted or rejected orders, and pay commissions in accordance with this Agreement.
- Commission. The Representative shall receive commission at the rate stated above on qualifying sales. Commission shall be calculated on ____________________ and shall become payable ____________________. Returns, cancellations, credits, taxes, and unpaid customer balances shall be treated as follows: ____________________.
- Expenses. The Representative shall bear its own ordinary business expenses unless otherwise agreed in writing. Pre-approved expenses shall be reimbursed upon submission of appropriate supporting documents.
- Confidentiality. The Representative shall not disclose or use confidential business, pricing, customer, technical, or commercial information except as necessary to perform this Agreement.
- Term and termination. This Agreement begins on the date stated above and continues for the agreed term unless terminated earlier by either Party on the notice period stated above. Either Party may terminate immediately for material breach, insolvency, fraud, or unlawful conduct, subject to applicable law.
- Post-termination matters. Upon termination, the Representative shall return the Principal's materials and confidential information. Any commission due after termination shall be determined in accordance with this Agreement and applicable law.
- Governing law and disputes. This Agreement shall be governed by the law stated above. The courts of ____________________ shall have jurisdiction, unless the Parties agree in writing to another dispute resolution method.
- Entire agreement. This Agreement constitutes the entire agreement between the Parties regarding its subject matter. Any amendment must be in writing and signed by both Parties.
Signed by the Parties on the date first written above.
For the Principal
Signature: ____________________
Name: ____________________
Title: ____________________
Date: ____________________
For the Representative
Signature: ____________________
Name: ____________________
Title: ____________________
Date: ____________________
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Commission and expense arrangements
The agreement should state precisely when commission is earned, when it becomes payable, and whether the principal may recover commission if a customer cancels, fails to pay, or receives a refund. It is also prudent to identify whether commission applies to repeat orders and to sales completed after termination.
Expenses should be treated separately from commission. Unless the contract says otherwise, disputes can arise over travel, trade shows, samples, advertising, and customer entertainment. Include a reimbursement process and any spending cap.
How to complete the template
Gather the commercial information first, including the intended territory, product list, pricing rules, customer exclusions, and internal approval process. Both parties should review the completed terms before signing and retain a dated copy.
- Identify the legal names, addresses, and registration details of the parties.
- Describe the products or services and the representative's territory or accounts.
- Agree the commission formula, payment timing, expense policy, and reporting method.
- Review termination, governing law, signatures, and any required local formalities.
Use objective wording for commission triggers: specify whether payment depends on a signed order, an invoice, delivery, or the principal receiving customer payment.
Termination and post-termination issues
The agreement should explain how either party may terminate, whether notice is required, and which breaches allow immediate termination. It should also address the return of documents, samples, customer data, and confidential material.
Some jurisdictions provide mandatory protections for commercial agents, including notice, indemnity, or compensation rights. A contract cannot always exclude those rules, so the governing law and the representative's actual activities should be checked carefully.
Frequently asked questions
Can a commercial representative sign contracts for the principal?
Only if the agreement or a separate written authorization grants that power. The contract should clearly state any limits on signing, pricing, warranties, discounts, and payment collection.
Is an exclusive territory always necessary?
No. The parties may choose a non-exclusive arrangement, exclusive territory, exclusive customer accounts, or a mixed structure. The agreement should state whether the principal may make direct sales in the territory.
When should commission be paid?
Commission may be payable on order acceptance, invoicing, delivery, or receipt of customer payment. The chosen trigger, calculation method, payment schedule, and treatment of cancellations should be written expressly.