Potential Ways Around 30-Day Termination Clauses — Part II

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Continuing a discussion on how a sales rep might recover post-termination sales commissions under a terminable representation agreement, and having previously discussed Procuring Cause, I turn now to Bad Faith (BF).

Bad Faith

A claim for BF in a principal-agent relationship will be more readily available. First, because there are fewer limitations on bringing such a claim, such as the limitation on a PC claim if the contract at issue addresses post-termination commission rights. With a claim for BF, a principal may follow a contract’s termination provisions to a tee, but a claim for BF may still be a winning … Read the rest

Potential Ways Around 30-Day Termination Clauses — Part I

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Let’s face it. When it comes to sales rep-principal relationships, sustainability often boils down to “What have you done for me lately?”

That answer, unfortunately, is oftentimes “Not enough.” Or, we sometimes hear the term that principals want “added value” from their sales reps, which usually comes up when an agent is earning their hard-earned commissions on a longer-term basis. Having previously written about expedited terminations of sales reps, and having recently litigated some of these issues, in various jurisdictions throughout the United States, there are two different possible means to protect sales reps who must sign representation agreements with … Read the rest

30-Day Termination and the Covenant of Good Faith and Fair Dealing

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Does 30 Days Really Mean 30 Days?

The poison pill for any independent sales agent that relies on building up and establishing a territory, or booking business, is the dreaded 30-day at will termination provision. Unfortunately, such provisions are found in the great majority of sales agent contracts I see. Is the agent left with any leverage, legally speaking, when the principal complies with such a short termination notice provision? The answer, surprisingly, may be yes!

One doctrine that may override a poison pill provision in an agent’s contract is the Covenant of Good Faith and Fair Dealing. In … Read the rest

Misunderstood Contract Terms

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Many agents come to my firm with great confusion about the more “boilerplate” terms in their written contracts. There seem to be several universally misunderstood terms that just keep getting bandied about erroneously:

  • Venue
  • Jurisdiction
  • Choice of Law
  • ADR

Each of these terms, often referred to as boilerplate, should be included in your contract, especially when considering that your principals are often headquartered and operate in different states than you.

Venue is the place where a lawsuit or other form of dispute resolution will take place.

Jurisdiction means that a particular court has authority to hear a particular dispute.

Choice Read the rest

Key Contract Terms Every Agent Needs

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Although most manufacturers abide by the MANA code of ethics and pay their agents in a timely manner all commissions owed, sometimes unfortunate circumstances arise causing an agent not to be paid. In the case where litigation thus arises, it is critical to have certain key contract terms to protect your rights.

Having seen many different representation agreements (contracts between sales agents and their principals) presented by sales agents in a wide variety of industries, there seem to be several universally misunderstood, absent or poorly written terms:

  • Venue
  • “Choice of Law”
  • “ADR” (Alternative Dispute Resolution)

Each of these terms really … Read the rest

How the Procuring Cause Doctrine Can Garner Long-Term Contract Protection: Or How I Learned to Stop Worrying and Got What I Was Worth

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The Scenario

Having represented sales agents in contract negotiation and litigation since 1989, I have seen a wide variety of contracts addressing the principal-agent relationship. Most often, reps will settle for contracts completely lacking in long-term commission protection. There seem to be several reasons for this. The rep:

• is new to the industry, has no true book of business, and will take anything to get in the door;

• does not understand there is no long-term protection;

• is so dependent on the commissions from this principal that they would rather accept a one-sided agreement than risk termination.

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