From Toothless to Tigers: A Look at State Sales Rep Statutes

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“Hey, Adam,” begins many an incoming office call, “the principal who owes me back commissions didn’t remember that our contract says Tennessee law (or Utah, Colorado, New Jersey, Georgia, etc.) applies. I can get triple commissions, right?”

“Well,” begins the formal, technical response to many such calls, while stalling for time. Then, the very first legal phrase taught in law school is invoked: “That depends.”

Many independent reps are familiar with sales rep protection statutes. These state laws are generally intended to help level the playing field with their principals when a commission dispute arises.

When a rep is terminated … Read the rest

Reps Should Not Always Turn the Other Cheek

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Every experienced rep has stories like this to tell, most often from a relationship with a manufacturer who is not a MANA member.

Two and a half years invested in developing an account while receiving zero compensation, a rep meets with the first stirrings of success. The customer finally agrees to receive samples, and the rep happily reports this development to his partner, the manufacturer. The response is swift: termination. The samples, meanwhile, are on their way directly, and the deal with the customer closes soon after.

After enduring an uncertain relationship for years with a principal who pays late, … Read the rest

The Procuring Cause Doctrine Enables Even Employees to Recover Post‑Termination Commissions

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This column ordinarily features legal issues confronting independent sales representatives who promote manufacturers’ products, not company reps involved in marketing the services of their employers. However, when Keith Miller maintained he was mistreated by his principal, who also happened to be his employer, it happened in a manner so brazen that all independent reps will not only feel his pain, but will respect and cheer his concerted efforts to get paid.

Employed for several years as a field sales representative for Paul M. Wolff Co., a subcontractor specializing in concrete finishing services known as PMW, Miller was responsible for facilitating … Read the rest

Major Publisher Mounts Defense to Rep Case

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Some manufacturers will initially consider a sales rep’s commission claim with sympathy, others with reasonableness, and perhaps most with nervous skepticism. Then there is The McGraw Hill Companies, Inc. (now known as McGraw Hill Financial, Inc.), a leading publisher of elementary school textbooks.

McGraw’s former educational division emptied the litigation arsenal in response to a claim brought by longtime independent sales rep, Shawn Kelly & Associates, for unpaid commissions (filed by this article’s author). It took the rep’s gritty determination to stand up for himself against a better funded, give-no-quarter defendant, for whom Kelly had netted millions in sales, to … Read the rest

Sound Agreement Allows Telecommunications Agent to Avoid Getting Disconnected From Commissions

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Most agents properly focus on generating sales after signing with a new principal. Even as corporations constantly merge or get “restructured,” consideration of the potential impact on the agent is rare. Yet several important questions are usually presented:

  • Is the independent representative’s commission stream adequately protected?
  • What happens if the acquiring party purchases only some of the principal’s assets?
  • And could the principal and the new purchaser orchestrate a sale enabling the purchaser to avoid paying commissions due?

These issues were front and center in a case recently decided by a Kentucky federal court after certain assets of a principal … Read the rest

Sticky Contract Issues Lead Jury To Wrap $8 Million Verdict Around Business-Producing Rep, Including For Future Commissions

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It’s an old, even classic dilemma for independent sales reps, but it continues to play out across the country. Fueled by his own sweat equity over long hours and on his own nickel, an industrious rep scores a big customer contract for a principal. Rather than treating the rep to a steak dinner and a pledge to honor its contract by commissioning the rep on this new-found business, a notice of termination is issued. The principal then brushes off the rep: “We’ll pay you everything we owe you as of today, and best of luck in your future endeavors. What’s Read the rest

Pet Product Rep Cleans Up After Manufacturer’s Mess, and Court Won’t Stop Barking About It

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In a sales rep contract drafted without attorneys and recently described by an appellate court as “doggone messy,” a pet supply manufacturer and its independent sales representative agreed the rep could be terminated “for cause” only under certain circumstances. As is so often the case, once the rep, Profit Pet, grew sales and the relationship was prospering, the principal, Dogswell, sought to tighten the contract terms and exercise more control. Not surprisingly, Profit Pet resisted, leading to its termination.

When Dogswell then attempted to classify the termination as “for cause,” Profit Pet sued to recover its commissions, and won

Read the rest

When and How a Sales Rep Should Retire

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Sales reps, especially after many years in the business, often start to think from time to time about retiring. Much to the surprise of many, they have trouble focusing on the decision. As the younger generation would say “What’s up with that?” Many sales reps always thought they would want to retire at some time in the future, but now they are beginning to wonder if maybe they really don’t, shouldn’t, or won’t be able to let go of the business they have known for most of their lives.

When considering these questions, remember that what you are facing is

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Principal Lacking Good Faith Commits A Breach of The Peace (Bridge)

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Ameron International produces fabricated steel products. Its sales rep in Western New York, West Empire Associates, learned that the Buffalo and Fort Erie Peace Bridge Authority, operator of the famed Peace Bridge (connecting the United States and Canada), was considering re-coating the entire bridge. West Empire quickly arranged a meeting between Ameron and the Authority.

West Empire then worked the phones for a few months with the Authority and Ameron, but did not otherwise assist in the preparation of Ameron’s proposal for the Peace Bridge project. Shortly after participating in the initial testing of Ameron’s bridge coating, Ameron terminated West … Read the rest

Sweating Out the Pursuit of a Cool Commission

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Though this court case seemed like an easy win for the principal, this rep firm managed to get reimbursed for lost commission.

Consider these brutal but undisputed facts in the case of an independent rep seeking to recover, in court, a commission on the sale of a product (a cooling tower used in the beverage processing industry):

  • The rep, MAK Automation, Inc., had an oral contract with its principal, GC Evans Sales and Manufacturing Co., Inc., that was non-exclusive, and did not furnish a specific geographical territory. The only undisputed contract term was that MAK had to generate or procure
  • Read the rest