Sales Agency Agreement Template
Appoints an agent for a territory, on commission, with targets and notice.
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This agreement is made on October 14, 2026 between [company] of [address] (“the Company”) and [agent] of [address] (“the Agent”).
1. Appointment
The Company appoints the Agent to solicit orders for the products listed at clause 2 in the territory of [territory]. The Agent solicits orders; the Company accepts or declines them and contracts directly with the customer. The Agent has no authority to accept an order, agree a price, vary these terms or bind the Company in any way.
2. Products
[add one product line per line]
3. Commission
The Company will pay the Agent [rate and basis] on orders solicited by the Agent in the territory and accepted by the Company. Commission falls due when the customer pays, and is paid within 30 days of the month in which payment is received. Where an order is cancelled or a credit note issued, the commission on it is reversed.
4. Targets
| Period | Target |
|---|---|
| [add one period per line] |
Missing a target is not in itself a breach, but entitles either side to review this agreement.
5. Expenses
Unless stated otherwise here, [who pays expenses].
6. How the Agent works
The Agent will use reasonable efforts to promote the products in the territory, will describe them only as the Company describes them, and will pass on customer complaints and market information promptly. The Agent will not sell competing products in the territory during this agreement without the Company’s written consent.
7. Term and notice
This agreement runs for an initial term of [initial term] from the date above and continues afterwards until either side gives three months’ written notice. Either side may end it immediately on a material breach that is not put right within 30 days of written notice.
8. On ending
Commission remains payable on orders solicited before the end date and accepted within 60 days after it. The Agent will return customer lists, samples and marketing material and will stop describing itself as connected with the Company.
9. Status
The Agent is an independent contractor. Nothing here creates employment, partnership or joint venture, and the Agent is responsible for its own tax and registrations.
10. Governing law
This agreement is governed by the laws of [jurisdiction].
What is a Sales Agency Agreement?
A sales agency agreement appoints someone to sell on your behalf in a defined territory, sets the commission they earn, and states what happens when either side wants out. It is the difference between a productive arrangement and a dispute about who owned the customer. Without it, an agent who introduced a buyer three years ago can still claim commission on every reorder, and you will have nothing in writing to say otherwise.
Manufacturers use these to reach markets they cannot staff themselves — a machine tool maker in one country appointing an agent in another, a food producer signing a regional representative, a software vendor engaging a reseller in a language it does not speak. Service firms use them too: recruitment consultants, travel operators and insurance intermediaries all work through appointed agents. The common thread is a person or firm who finds and negotiates with buyers but does not take title to the goods, and is paid on results rather than salary.
Commercial agency is one of the areas where the law does not follow the contract. In the UK and across the EU, commercial agents selling goods have statutory rights on termination — compensation or an indemnity — that the parties cannot simply write out of the agreement, and there are rules about commission on repeat orders. India's Contract Act and Sale of Goods Act treat agency differently again, as do state laws in the US and Australia. Before you rely on a termination clause, check the agency legislation and case law that applies to the agent's territory and your own.
This is not an employment contract, and calling someone an agent does not settle the question. Tax authorities and employment tribunals look at control, exclusivity, who bears the cost and who carries the risk — an agent who works only for you, to your timetable, under your direction may be reclassified as an employee or a worker regardless of the label. It is also not a distribution agreement: a distributor buys stock and resells at its own price and risk, an agent never owns the goods. And it does not create a partnership or give the agent authority to sign contracts in your name unless you say so explicitly.
What to put in a Sales Agency 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 |
| Territory | For example: Central Ohio, Kentucky and Merseyside |
| Products covered | One per line |
| Commission rate | For example: 4% of net invoiced value, excluding tax and delivery |
| Targets | One per line: Period | Target |
| Expenses | Free text |
| Initial term | Free text |
| Governing law | For example: England and Wales |
How to write a Sales Agency Agreement
Define the territory and the products precisely
Name the geography and the product lines, and say whether the appointment is exclusive, sole or non-exclusive. ‘Exclusive agent for the XR-200 pump range in Karnataka and Tamil Nadu’ is enforceable. ‘Agent for South India’ is an argument waiting to happen. State whether online orders placed from inside the territory count, because that is where most modern disputes start.
Set the commission rate and the trigger
State the percentage, what it is calculated on — invoice value net of tax, freight and discounts, not gross — and the moment it becomes payable. Commission on order, on despatch and on payment received are three different deals. Tie it to cleared payment and say what happens if the customer pays late, pays partly, or returns the goods after commission has already been paid.
State targets and what missing them means
A minimum volume or value per period gives you a way out of a dormant appointment. Be specific about the consequence: does missing the target convert an exclusive appointment to non-exclusive, allow you to shrink the territory, or trigger termination? A target with no stated consequence is a wish. Set the review date and the source of figures both sides will accept.
Write the notice and post-termination terms
Give the notice period in months, in writing, and say what happens to orders in the pipeline at the end date. The usual fight is over commission on business the agent introduced that closes after they leave — state the tail period, if any, and how repeat orders from introduced customers are treated. Confirm return of samples, price lists and customer records.
Cover confidentiality, data and conduct limits
The agent will hold your pricing, your margins and your customer list. Say those stay yours and cannot be used elsewhere. If the agent handles customer personal data, say who is controller and who is processor and reference the data protection law that applies. Prohibit the agent from giving warranties, quoting delivery dates or making representations you have not authorised in writing.
Common mistakes
- Leaving ‘exclusive’ undefined, so the agent assumes it bars your own direct sales into the territory and claims commission on every order your head office takes.
- Paying commission on invoiced value rather than on payment received, which leaves you funding commission on a customer who never pays.
- Assuming a termination clause overrides statutory agency protections, then discovering after you serve notice that the agent has a compensation claim you cannot contract away.
- Failing to say who owns the customer list, so a departing agent takes your buyers to a competitor and you have nothing in writing to argue with.
- Setting no minimum performance target, which leaves you locked into an exclusive territory with an agent who has stopped selling and no clean way to replace them.
Frequently asked questions
What is the difference between a sales agent and a distributor?
An agent introduces and negotiates but never buys the goods; you invoice the customer and pay the agent commission. A distributor buys stock from you, takes ownership and resells at its own price, keeping the margin. The distinction changes who carries credit risk, who sets the resale price and, in several jurisdictions, whether statutory agency protections apply on termination. Decide which you actually want before drafting.
How much commission is normal for a sales agent?
Rates vary widely by industry, order size and how much work the agent does. Capital equipment with long sales cycles is typically lower than fast-moving consumer goods; an agent who also handles after-sales support usually earns more than one who only makes introductions. Rather than copying a figure, work backwards from your gross margin and decide what you can pay while the deal still makes sense at your target price.
Can I terminate a sales agency agreement early?
You can terminate according to the notice provisions you wrote, and for material breach if the agreement allows it. Whether that ends your financial obligation is a separate question — in the UK and the EU, commercial agents selling goods may be entitled to compensation or an indemnity on termination regardless of the contract. Check the agency regulations applying in the agent's territory, and take advice before serving notice on a long-standing agent.
Does a sales agency agreement need to be registered anywhere?
In most jurisdictions a private commercial agency agreement is not filed with any registry. Some countries — particularly in the Gulf and parts of Latin America — do require registration of commercial agencies, and registration can make the agent very difficult to remove. If your agent is outside your home country, check the local commercial agency law and registration requirements before signing anything.
Should the agreement be signed by both parties?
Yes. Both sides sign and date it, each keeps an original or a countersigned scan, and the signatories should be people with authority to bind their organisations. Initial any schedules covering territory, products, prices and targets, since those are the pages most likely to be swapped later. If the agent is a company rather than an individual, name the company and check it exists.
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.