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Commission Agreement
I need a commission agreement for a freelance sales agent who will be selling our software products in the DACH region. The agreement should include a tiered commission structure based on sales volume, a 30-day payment term, and a clause for termination with a 2-week notice period.
What is a Commission Agreement?
A Commission Agreement sets out how and when a sales agent or broker will get paid for successfully closing deals or bringing in business. In Austria, these contracts follow strict rules under the Commercial Agents Act (Handelsvertreter-gesetz), which protects both the principal company and the agent.
The agreement spells out key details like commission rates, payment timing, and performance targets. Austrian law requires clear terms about when commissions become due, especially for recurring sales. Most agreements include specific provisions for different product lines, territory restrictions, and what happens if a client cancels or returns items.
When should you use a Commission Agreement?
Use a Commission Agreement when bringing sales agents, brokers, or intermediaries into your business to sell products or services. This becomes essential for Austrian companies working with independent contractors who earn money based on successful deals or client acquisitions.
These agreements prove particularly valuable in industries like real estate, insurance, and wholesale distribution, where sales performance drives compensation. They protect both parties by clearly defining commission structures, payment schedules, and sales territories. Austrian law requires written documentation for commission-based relationships, making these agreements mandatory for compliance with the Commercial Agents Act.
What are the different types of Commission Agreement?
- Commission Contract Agreement: Standard agreement for direct sales relationships, outlining basic commission structures and payment terms
- Middleman Commission Agreement: Specialized for intermediaries who connect buyers and sellers without direct sales involvement
- Sales Representative Contract: Comprehensive agreement for professional sales agents, including territory rights and performance targets
- Commission Share Agreement: Used when multiple parties split commission earnings from joint sales efforts
- Override Commission Agreement: For management-level arrangements where additional commission is earned on team sales
Who should typically use a Commission Agreement?
- Sales Agents: Independent contractors who earn commissions by selling products or services, protected under Austrian Commercial Agents Act
- Principal Companies: Businesses that engage sales agents, responsible for commission payments and setting performance targets
- Legal Counsel: Draft and review Commission Agreements to ensure compliance with Austrian law and protect both parties' interests
- Sales Managers: Oversee commission structures, track performance metrics, and manage agent relationships
- Financial Officers: Handle commission calculations, payments, and maintain records for tax compliance
- Industry Regulators: Monitor adherence to Austrian commercial and employment regulations in commission-based relationships
How do you write a Commission Agreement?
- Basic Details: Gather full legal names, business addresses, and tax identification numbers of all parties involved
- Commission Structure: Define exact commission rates, calculation methods, and payment schedules
- Territory Rights: Map out specific geographical areas or market segments where the agent can operate
- Performance Metrics: Set clear sales targets, reporting requirements, and evaluation criteria
- Legal Requirements: Check Austrian Commercial Agents Act compliance using our platform's built-in validation tools
- Payment Terms: Specify commission payment timing, conditions for earned commissions, and handling of client returns
- Duration Terms: Decide contract length, renewal options, and termination conditions
What should be included in a Commission Agreement?
- Party Details: Complete legal names, addresses, and registration numbers of principal and agent
- Commission Terms: Precise calculation methods, rates, and payment schedules as required by Austrian law
- Scope of Authority: Clear definition of agent's powers, territory rights, and product lines covered
- Performance Standards: Specific sales targets, reporting requirements, and evaluation criteria
- Termination Provisions: Notice periods and compensation rules per Commercial Agents Act
- Data Protection: GDPR-compliant clauses for handling customer and sales data
- Non-Compete Terms: Post-contractual restrictions within Austrian legal limits
- Dispute Reֱ: Austrian jurisdiction and applicable commercial law references
What's the difference between a Commission Agreement and an Agency Agreement?
A Commission Agreement differs significantly from an Agency Agreement in several key aspects, though both involve business relationships. While Commission Agreements focus specifically on payment structures for sales performance, Agency Agreements establish broader representative authority.
- Scope of Authority: Agency Agreements grant power to act on behalf of the principal in various matters, while Commission Agreements strictly define sales-related activities and compensation
- Legal Obligations: Agency relationships create fiduciary duties and broader liability under Austrian law, whereas Commission Agreements primarily govern payment terms and sales targets
- Duration Structure: Agency Agreements typically establish ongoing relationships with broader responsibilities, while Commission Agreements often focus on specific sales periods or targets
- Regulatory Framework: Agency Agreements fall under general commercial law principles, while Commission Agreements specifically align with the Austrian Commercial Agents Act
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