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Representation Agreements (sometimes called Sales Agency Agreements), should be in writing and should cover matters which can become points of serious contention. Here are some of those matters:

  • is the Representative given any sort of “exclusive”, as to geographic territory or types of customers
  • if there is an exclusive territory, should any “house accounts” of the Company be excluded
  • is the Representative to be prohibited in selling outside the exclusive territory
  • is the Representative to be permitted to offer other products or services, so long as they are not competitive with the Company’s products or services
  • what is the term of the agreement, and if the agreement contains an exclusive, are there minimum “performance” requirements which, if not met, would entitle the Company to terminate the Representative and does the Representative have an obligation to give periodic reports of the Representative’s sales efforts
  • are commissions payable only on net invoice amounts, exclusive of sales tax, freight, insurance and other add-on charges and commissions only paid after the Company is paid
  • is it clear that purchase orders generated by the Representative must be in writing and are subject to the Company’s acceptance and written confirmation, which may be denied in the Company’s sole discretion
  • is it clear that Representative is responsible for all expenses incurred in connection with sales effort
  • is there a clear prohibition against payments or other benefits given to customers by the Representative to obtain orders
  • for a period of time after termination of the relationship should there by an specific prohibitions for a period of time against competitive activities by the Representative
  • should there be a provision for non-binding mediation before litigation and where the mediation is to be conducted
  • should there be specific provisions as to what state’s laws govern the agreement and in what state or states any litigation can be brought