The Blank Check* — Part IBy Charles Cohon
The call came in early in the morning, long before normal business hours, but I picked up anyway. The caller sounded panicky, and I quickly discovered that his panic was justified.
“About 15 years ago I signed a blank check. No date. No ‘Pay to the Order of.’ No amount. Just my signature. I gave it to someone I’d just recently met, but he seemed so trustworthy. And for 15 years I kept making deposits into that account and never gave it another thought.
“Yesterday I found out that the check I signed 15 years ago was presented to my bank and the account has been cleared out. What can I do?”
OK, that is not exactly what the caller said. But it was close. Here is what the caller actually had to say.
“About 15 years ago I signed a rep agreement with 30-day cancelation terms. No extended post-termination commission. No ‘life-of-part, life-of-program’ clause. I’d only recently met the sales manager, but he seemed so trustworthy. And for 15 years I kept growing that principal’s sales, and never gave it another thought.
“Yesterday I found out that I’d been terminated and that all the commissions I would have received for customers I’d closed over the past 15 years will end in 30 days. This is my number one line and it’s 50 percent of my income. What can I do?”
For this contract and this principal, the only thing you can do is have a rep-savvy attorney read that contract line by line and review the laws of your state and the laws of the places where the principal does business to be sure you know this principal’s obligations to you.
For future contracts with new principals, learn from this experience and negotiate extended post-termination commission and/or “life-of-part, life-of-program” clauses before you sign any new agreements.
For other principals already on your line card, review your contracts to see how many other 30-day “blank check” agreements you’ve signed and watch for opportunities to get those agreements amended to improve your post-termination commission payments.
At the end of the last paragraph you probably shook your head in disbelief. “Really? You expect my current principals to renegotiate my post-termination commissions?”
Not often, but occasionally there will be times when asking to add extended post-termination commissions to an existing contract can be put back on the table. Which is the topic for “The Blank Check Part Two” on this page in the next issue of Agency Sales.
* Your legal recourse for a signed blank check may be better than your recourse for a badly written contract. This column is not legal advice; for definitive information, consult your attorney.