How To Draw Up an Independent Sales Rep Agreement

Standardized Legal Documents How To Draw Up an Independent Sales Rep Agreement

A Rundown on an Independent Sales Rep Agreement

Independent sales representatives are usually the best option for small and startup businesses. There are no upfront investments, and the risks are minimal.

This article will help you understand the basis of an independent sales rep agreement and show you how to write a contract on your own. 

What Is an Independent Sales Rep Agreement?

An independent sales representative agreement is a legal document that a business and a person that sells a service or product for appropriate compensation sign upon starting to work together. The contract lays down terms of all the activities and rights and obligations of both parties.

Sales rep agreements protect both the company and independent sales representatives. Here’s what the agreement should define:

  • How much the products cost
  • What people sales reps sell the products to
  • Where sales reps sell the products

What Should a Sales Representative Agreement Include?

Every independent sales rep agreement should outline the terms that can vary depending on the state. Every sales rep contract includes several main provisions, and you can find their brief descriptions in the table below:

Independent Sales Rep Agreement Elements

Explanation

Classification of the Sales Representative

It should define whether the sales representative is an independent contractor or employee. Determining this is important because of the issues like taxes, legal liability, and insurance coverage
Duties and Responsibilities of the Sales RepThe provision should identify the sales rep’s duties and responsibilities, including:

  • Preserving the image and reputation of the company
  • Having trained and capable staff
  • Promoting service and selling products

Products

The clause should identify which products a sales representative can sell, to whom, and where

It should also define any limitations that the business might have regarding the products

Compensation

It is one of the most important sections of every independent sales rep agreement. This provision should determine how the sales rep will be paid and specify the basis of commissions and possible bonuses. It should address any other issues regarding commissions

Confidentiality

This provision must specify the type of information the sales representative is not allowed to share with anyone outside the company. Confidential information may include:

  • Sales lists
  • Vendor lists
  • Customer lists
  • Business plans
  • Financial information
  • Price structures
  • Commission rates
  • Business trade secrets
  • Computer programs
  • Operating procedures

Contract Termination

It should state the ground rules for agreement termination. Reasons for termination can be classified as:

  • For cause
  • For convenience

The agreement should also cover what happens after the termination

How To Draft Sales Rep Agreements on Your Own

If you want to create an independent sales rep agreement by yourself, you can download a contract template from the internet. There are free versions available, but you should be careful as they can be too general.

Here’s how to write an independent sales rep agreement:

  1. Add the contact information of both parties
  2. Insert a statement confirming that the sales representative is an independent contractor and not an employee
  3. Include an explanation of what the sales rep can and cannot sell
  4. Explain how the commissions are going to be handled
  5. Add a non-disclosure clause about confidential information
  6. Specify the terms of termination
  7. Provide a statement about the company’s property—clarify that all the property should be returned after the agreement ends
  8. Include signatures of both parties

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Creating contracts and other legal documents is complicated if you don’t have any knowledge on the subject. One small mistake can make your document unenforceable in court. It’s known that attorneys overcharge their services, which makes people reluctant to hire them.

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Once you give us the necessary information, we will generate a personalized legal document. You can use DoNotPay to e-sign and fax the document to other parties.

What Legal Documents Can DoNotPay Customize for You?

With DoNotPay’s Standardized Legal Documents feature, you can create various contracts and legal documents, but that is not all you can do. You can use our learning center to inform yourself about many other legal documents. 

Check the following table to see the documents you can create with DoNotPay and those you can learn about:

TemplatesGuides

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