Referral Agreement Template
Who gets paid what for an introduction, and when.
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This Agreement is made on October 14, 2026 between [company] of [address] (the Company), and [referrer] of [address] (the Referrer).
1. What counts as a referral
[definition of a valid referral]
2. Commission
The Company will pay the Referrer [rate]% of [basis], payable [when]. Commission is calculated on amounts actually received, net of tax, refunds and credits.
3. How the Referrer must behave
The Referrer will describe the Company’s services accurately, will not make promises on the Company’s behalf about price, performance or timing, and will not hold itself out as the Company’s agent or employee. The Referrer is responsible for its own taxes on any commission.
4. No exclusivity
This Agreement is not exclusive either way. The Company decides whether to accept any referred customer, and nothing here obliges it to do so.
5. Term
Either party may end this Agreement on fourteen days’ written notice. Commission remains payable on referrals that qualified before the end date.
6. Governing law
This Agreement is governed by the law of [jurisdiction].
What is a Referral Agreement?
A referral agreement sets out what one party gets paid for introducing a customer to another, and on what conditions. It fixes the fee, what counts as a qualifying introduction, when payment falls due and how long the arrangement runs. Without one, an introduction that turns into a large contract eighteen months later becomes an argument nobody can settle, and the relationship that produced the lead usually ends with it.
Consultants, accountants, brokers, agencies, freelancers, software vendors, tradespeople and professional firms all use them. The typical shape is simple: someone with a network introduces a prospect, the receiving business does the selling and the delivery, and the introducer takes a percentage of the first invoice or a flat fee per converted client. It is used both for occasional introductions between two businesses and as a standing partner programme where the same terms apply to many introducers at once.
Two things vary sharply by jurisdiction. First, regulated sectors restrict who may be paid for an introduction at all — financial services, insurance, credit broking, immigration advice, legal services, healthcare referrals and estate agency each have rules in most countries, and paying an unlicensed introducer can be an offence rather than merely a contract problem. Second, referral fees may have to be disclosed to the customer. In healthcare and public procurement the restrictions are tighter still. Check the position with the relevant regulator and a qualified adviser for your sector before signing.
A referral agreement does not make the introducer your agent. They should not be negotiating, quoting, advising or signing on your behalf, and the agreement should say so — an introducer who behaves like an agent can bind you or create agency and employment consequences you did not intend. It is also not a reseller or distribution agreement: the customer contracts directly with you, at your price, on your terms. And it is no substitute for advice on your own sector's rules about paying for introductions.
What to put in a Referral Agreement
These are the details this template asks for. Anything left blank is marked in red on the preview so you can see what is still missing.
| Field | What goes in it |
|---|---|
| First party | For example: Barton Supply Co. |
| First party address | For example: Unit 7, Barton Road, Columbus, OH 43212 |
| Second party | For example: Halliwell Interiors Inc. |
| Second party address | For example: 44 High Street, Columbus, OH 43215 |
| Commission is paid on | Free text |
| Commission rate | For example: 10 |
| Fixed fee, if applicable optional | For example: 150.00 |
| What counts as a valid referral | For example: A named contact introduced by email who was not already in our pipeline, and who signs… |
| Paid when | For example: within 30 days of the referred customer paying |
| Governing law | For example: England and Wales |
How to write a Referral Agreement
Define what counts as a qualifying referral
The introduction must be identifiable before it earns anything: a named contact submitted in writing, acknowledged by you, and not already on your pipeline. State the deduplication rule — if the prospect is already a live opportunity or an existing client, no fee is due. Vague wording here is what produces the fight, because both sides genuinely believe they are right.
Fix the fee and its calculation base
State the percentage or flat amount, and be precise about the base: net invoiced value excluding taxes, expenses, third-party pass-through costs and discounts. Say whether it applies to the first order only, to a fixed period of revenue, or to renewals as well. ‘Ten per cent of the deal’ means four different numbers to four different people.
Set the trigger and the payment date
Commission on invoice raised and commission on cash received are very different risks — if the client never pays, you have paid a fee on nothing. Tie the fee to money received, then state the payment window, for example within thirty days of the end of the month in which the customer paid. Add what happens on refunds and cancellations.
Put a time limit on the introduction
An introduction cannot earn a fee forever. State an attribution window — commonly six or twelve months from the date the referral was acknowledged — after which the lead expires. Also state what happens when the same prospect is introduced by two people: the first written submission wins, and say so, because sooner or later it will happen.
Cover confidentiality, data and termination
The introducer will handle contact details, so say how personal data may be used and require them to comply with the data protection law that applies to them. Add confidentiality over pricing and pipeline, a right for either side to end the arrangement on notice, and a clause confirming that fees already earned on referrals made before termination survive it.
Common mistakes
- Leaving ‘qualifying referral’ undefined means an introducer can claim a fee on a client who was already in your pipeline, and you have nothing to point at.
- Paying commission on invoices raised rather than on cash received leaves you funding a fee on a debt that is never collected.
- Failing to state whether the fee applies to renewals and repeat orders creates an open-ended liability that surfaces years later on a large recurring account.
- Paying an introduction fee in a regulated sector without checking who may lawfully receive one can be a regulatory breach, not merely an unenforceable contract.
- Letting the introducer quote prices or negotiate terms makes them look like your agent, which can bind you to deals you never agreed to.
Frequently asked questions
What is a typical referral fee?
It varies by sector far too much for a single figure to be useful — a percentage of first-year revenue is common in services, a flat fee per converted customer is common in trades and consumer work, and recurring revenue businesses often pay a smaller percentage for a longer period. Decide from your own margin and the acquisition cost the referral replaces, not from a benchmark.
What is the difference between a referral agreement and an affiliate agreement?
A referral agreement is usually a negotiated document between two named parties covering introductions of individually identified prospects. An affiliate agreement is a standard-form, one-to-many programme where tracking is automated through links or codes and the terms are not negotiable. The commercial logic is the same; the differences are identification, scale and how attribution is proved.
Do I have to tell the customer about the referral fee?
In several regulated sectors, yes — disclosure of introduction fees is required in areas such as financial services, credit, insurance, property and legal work in many countries, and a professional body may impose its own rule. Even where disclosure is not compulsory, a customer who finds out later usually treats it as a trust problem. Check the specific requirement for your sector.
Does a referral agreement need to be witnessed or notarised?
For a straightforward commercial arrangement between businesses, usually not — signature by both parties is normally enough, and electronic signature is widely accepted. Formality requirements differ by country and by document type though, and some jurisdictions treat particular agreements differently. If the value is significant, have it checked locally rather than assuming a signed email chain will do.
Can I pay a referral fee to an employee of the customer?
That is where referral fees become a bribery and corruption problem. Paying someone to steer their own employer's business towards you, without the employer's knowledge, is a criminal offence in many countries and a serious disciplinary matter for the individual. Take advice before any arrangement of that shape, and never structure one so that the employer cannot see it.
This page explains general practice and is not legal advice. Requirements differ between countries and, in some cases, between states — check what applies where the document will be used.