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Sales Agency Agreement

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Short Form of Non-Exclusive Sales Agency Agreement

Sales Agency Agreement made the day of of , 20 ,

between , a corporation organized and existing under

the laws of , with its principal office located at ,

, referred to herein the Principal, and

, of ,

referred to herein the Agent.

Whereas, the Principal is the owner and operator of a business known as , which is engaged in the business of

; and

Whereas, the Principal desires to employ the Agent for, and the Agent is willing to act for the Principal in, selling , hereinafter called the Product;

Now, therefore, for and in consideration of the mutual covenants contained in this Agreement, and other good and valuable consideration, the parties agree as follows:

1. Principal shall employ Agent as its non-exclusive agent to solicit orders for the sale of the Product, at the prices and on such other terms and conditions established by the Principal, in the following geographic area: .

2. Agent accepts such appointment and agrees to devote his best efforts to solicit orders but shall have no authority, right or power to accept any order, or to assume or create any obligation on behalf of the Principal.

3. Agent shall not engage in the selling of the Product for any competitor of Principal.

4. In full compensation of the services of Agent, Principal shall pay the Agent % of the sales price of all sales of the Product by Agent during the term of this Agency. The commission shall be paid monthly on or before the 15th day of each month beginning on the

5. This Agreement shall commence on , and terminate on , unless earlier terminated by the Principal for just cause or by the mutual agreement of the Principal and Agent.

6. The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision.

7. The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.

8. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of .

9. Unless provided herein to the contrary, any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement.

10. Notwithstanding the foregoing, and anything herein to the contrary, any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect.

11. This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.

12. Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party.

13. The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.

14. Principal and Agent both acknowledge that all information and materials furnished from the Principal concerning this Agreement and the performance of it is confidential and may not be used for any purpose other than in connection with this Agreement.

15. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.

16. In performing under this Agreement, all applicable governmental laws, regulations, orders, and other rules of duly-constituted authority will be followed and complied with in all respects by both parties.

WITNESS our signatures as of the day and date first above stated.

By:

.

By:

Enter text✕

What a Sales Agency Agreement Covers

A Sales Agency Agreement is a written contract appointing an agent to solicit orders, promote products, or negotiate sales on behalf of a principal. It defines scope of authority, territory, commission structure, term and termination rights, confidentiality obligations, and intellectual property treatment. The agreement allocates responsibilities for taxes, reporting, and customer relationships and typically addresses liability, indemnity, and dispute resolution. While private between parties, it may affect regulatory obligations such as tax reporting (1099-NEC) and industry-specific compliance rules.

Why a Clear Sales Agency Agreement Matters

A well-drafted agreement reduces disputes, clarifies commissions, and protects customer ownership and trade secrets. It sets performance expectations and limits legal exposure while aligning compensation with business goals.

Why a Clear Sales Agency Agreement Matters

Who Typically Prepares and Signs This Agreement

Companies hiring external sales representatives, independent agents, distributors, or brokers usually prepare Sales Agency Agreements to define the relationship before transactions begin.

  • Small business owners and founders who engage independent agents to expand market coverage regionally or nationally.
  • Manufacturers and distributors that appoint non-employee agents to solicit orders under defined territories and terms.
  • Software vendors and service providers that use channel partners or resellers to sell subscriptions or licensed products.

Small businesses, manufacturers, software vendors, and professional service firms commonly use these contracts to scale sales while retaining control over pricing, branding, and compliance.

Key Parties and Typical Signatories

Principal

Company owner, director, or authorized officer who grants agency authority and obligates the business. The Principal’s signer should have corporate signing authority and be prepared to accept indemnity and warranty obligations on behalf of the business, or identify a delegated signatory by title.

Agent

Individual or entity appointed to solicit sales or negotiate on behalf of the Principal. The Agent’s signatory must be able to accept commission terms, confidentiality duties, and any non-compete or territory limitations specified in the agreement.

Essential Information to Include

Party Names: Full legal entity names
Addresses: Street, city, state, ZIP
Tax ID: EIN or SSN/TIN
Term Dates: Effective and expiration dates
Compensation: Commission formula or schedule
Signature Blocks: Signed name, title, date

Step-by-Step: Completing a Sales Agency Agreement

Follow these steps in order to prepare, review, and execute the agreement with minimal friction.

  • 01
    Gather Details: Collect party names, tax IDs, territory, and commission data.
  • 02
    Draft Terms: Write scope, exclusivity, payment, termination, and confidentiality clauses.
  • 03
    Review Legally: Have counsel review key liability and IP provisions.
  • 04
    Execute: Sign with appropriate authentication and retain executed copies.

Setting Up an Online Completion Workflow

Configure an online workflow that enforces fields, signer order, and audit logging for compliance and recordkeeping.

Field Configuration
Signer Order Principal first, then Agent
Authentication Email link or SMS code
Reminders Auto-reminders at 3 and 7 days
Retention Store signed PDF with audit log

Technical Considerations for eSigning and Sharing

Choose a platform that supports secure signatures, multiple file formats, and integration with your CRM or document repository.

  • File Formats: PDF and DOCX supported
  • Integrations: Salesforce, NetSuite, Microsoft 365
  • Authentication: Email and optional SMS/KBA

Ensure the platform provides an audit trail and encryption at rest and in transit to meet corporate and regulatory requirements.

Where to Send and How Execution Works

Execution typically follows a straightforward flow: prepare the document, assign signers, set authentication, and send for signature.

  • Upload: Place final draft in platform as PDF or DOCX
  • Tag Fields: Add signature, initial, and date fields
  • Assign Signers: Add signer emails and order
  • Send: Distribute link or email invite to signers

Core Clauses to Include in a Professional Agreement

Include clauses that allocate risk, define performance, and set payment mechanics to avoid ambiguity.

Scope of Authority

Define permitted sales activities, negotiation limits, and binding authority.

Compensation

Detail commission rates, calculation method, payment timing, and clawback terms.

Term and Termination

Specify duration, renewal, and notice requirements for termination.

Confidentiality

Protect trade secrets, pricing, and customer lists with clear confidentiality obligations.

IP and Ownership

Assign ownership of contractor-created materials and protect trademarks and copyrights.

Dispute Resolution

Choose governing law, forum, and whether arbitration or courts apply.

Practical Tips for Accurate, Efficient Completion

Use these best practices to reduce errors, speed execution, and preserve legal enforceability.

Standardize Templates
Keep a single vetted template and use version control to prevent divergent clauses across deals; standardization reduces review time and legal risk.
Confirm Tax Data Early
Obtain completed W-9 from agents before first payment to avoid backup withholding and to ensure correct 1099 reporting.
Document Authority
Record who approved the appointment and verify signatory authority to avoid later disputes about agent powers.
Audit Trail Retention
Retain signed PDFs with audit logs and metadata to support enforcement, audits, and potential litigation.

Common Mistakes to Avoid

  • Using vague commission language that fails to define net vs. gross or treatment of returns and chargebacks.
  • Failing to obtain W-9 and TIN leading to backup withholding or incorrect 1099 filing.
  • Skipping legal review for exclusivity or non-compete clauses that may violate state law.
  • Relying on handwritten initials without clear attribution or audit trail for electronic agreements.

Penalties and Risks from Errors or Omission

1099 Penalties: IRC §6721: $60–$330 per form for late/incorrect returns
Backup Withholding: 24% withholding if TIN missing or incorrect
I-9 Violations: 8 CFR §274a.2: $281–$2,789 per violation
Fraud Exposure: Potential civil liability for unauthorized agency acts
Breach Damages: Contract damages and lost profits claims
Reputational Risk: Customer loss and partner disputes

Key Dates and Reporting Deadlines to Track

Track execution dates, payment cycles, and tax-reporting deadlines tied to the agency relationship.

Effective Date:

Date agreement begins; use MM/DD/YYYY format

Termination Notice:

Number of days required prior to ending the relationship

Commission Payment:

Specify monthly, quarterly, or milestone payment timing

1099-NEC Deadline:

Jan 31 for reporting nonemployee compensation

W-9 Collection:

Obtain before first payment to the Agent

eSignature Vendor Comparison for Executing Agreements

Comparison of common eSignature providers for executing Sales Agency Agreements. signNow is listed first per vendor ordering rules.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Real-World Examples of Agency Agreement Use

These examples illustrate typical uses and outcomes from organizations that centralized signing and workflows.

Optica Ventures

The interface is simple and easy-to-use for our team; more importantly, it is just as easy for our customers.

  • Improved turnaround on signed agency contracts by centralizing templates and reminders.
  • Result: faster onboarding of agents and clearer commission tracking, which reduced disputes and administrative time.

Martin Properties

I can process and execute all of these documents online with 100% compliance and built-in security.

  • Used mobile and offline signing on site visits.
  • Result: closed more listings remotely and maintained a consistent audit trail across transactions and agents.

Frequently Asked Questions About Sales Agency Agreements

Answers to common legal, tax, and execution questions to help avoid delays and compliance issues.


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