Sales Commission Agreement Format in India

SALES COMMISSION AGREEMENT

Document ID: SCA-2024-IND-001
Effective Date: [Effective Date]
Version: 1.0
Governing Jurisdiction: Laws of India; Courts of [City/State], India.

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LEGAL COMPLIANCE NOTICE

This document is provided for informational purposes as a template for a Sales Commission Agreement governed by the laws of India, including the Indian Contract Act, 1872. This document is not a substitute for formal legal advice. Local jurisdictional requirements, stamp duty obligations under the Indian Stamp Act, and specific industry regulations may necessitate substantive modifications. Execution of this document should occur on non-judicial stamp paper of appropriate value as prescribed by the state in which the agreement is executed.

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1. PARTIES

This Sales Commission Agreement ("Agreement") is entered into on this [Day] day of [Month], [Year] (the "Effective Date") by and between:

[Company Full Legal Name], a company incorporated under the Companies Act, 2013, having its registered office at [Principal Address] (hereinafter referred to as the "Company");

AND

[Agent Full Legal Name], an individual/entity having its principal place of business/residence at [Principal Address] (hereinafter referred to as the "Agent").

2. RECITALS

(a) The Company is engaged in the business of [Description of Business]. (b) The Company desires to engage the Agent to solicit sales for the Company’s products/services, and the Agent desires to accept such engagement on the terms and conditions set forth herein.

3. SCOPE OF SERVICES

The Agent is authorized to act as a non-exclusive sales representative for the Company to solicit orders for the Company's products/services within the territory of [Territory/Region]. The Agent shall exercise best efforts to promote the Company’s interests and shall adhere to the Company’s pricing policies and operational guidelines.

4. COMPENSATION & PAYMENT TERMS

(a) Commission Rate: The Company shall pay the Agent a commission of [Percentage]% of the Net Revenue actually received by the Company from sales generated by the Agent. "Net Revenue" is defined as the gross invoice amount less applicable taxes (GST), shipping, insurance, and returns/credits. (b) Invoicing: The Agent shall submit a monthly statement of commission due by the 5th day of the following month. (c) Payment Timeline: Subject to verification, the Company shall remit the commission within [Number] days of the receipt of payment from the end customer. (d) Interest: Any undisputed overdue payments shall accrue interest at a rate of [Percentage]% per annum from the due date until the date of payment.

5. TERM & TERMINATION

(a) Term: This Agreement shall commence on the Effective Date and remain in force for a period of [Duration], unless terminated earlier. (b) Termination for Convenience: Either party may terminate this Agreement by providing [Number] days' prior written notice to the other party. (c) Termination for Breach: Either party may terminate this Agreement immediately upon written notice if the other party commits a material breach and fails to cure such breach within [Number] days of receiving written notice of the breach.

6. INTELLECTUAL PROPERTY & WORK MADE FOR HIRE

All materials, including marketing collateral, client lists, and software provided by the Company, remain the sole property of the Company. Any intellectual property developed by the Agent specifically for the Company under this Agreement shall be deemed "work made for hire" and shall vest exclusively in the Company.

7. CONFIDENTIALITY

The Agent acknowledges that they will have access to "Confidential Information" (customer lists, pricing models, business strategies). The Agent agrees to maintain absolute confidentiality and shall not disclose such information to any third party during or after the term of this Agreement.

8. REPRESENTATIONS & WARRANTIES

Each party represents and warrants that: (i) it has the full legal power and authority to enter into this Agreement; (ii) this Agreement constitutes a valid and binding obligation; and (iii) the execution of this Agreement does not violate any existing contracts or statutory obligations.

9. LIMITATION OF LIABILITY & INDEMNIFICATION

(a) Limitation: In no event shall the Company be liable for any indirect, consequential, or punitive damages. The Company’s total liability shall not exceed the total commissions paid to the Agent in the six (6) months preceding the claim. (b) Indemnification: The Agent agrees to indemnify and hold harmless the Company against any claims, losses, or legal fees arising from the Agent’s gross negligence or willful misconduct.

10. DISPUTE RESOLUTION & GOVERNING LAW

(a) Governing Law: This Agreement shall be governed by and construed in accordance with the laws of India. (b) Arbitration: Any disputes arising out of this Agreement shall be settled through binding arbitration held in [City], India, under the Arbitration and Conciliation Act, 1996, by a sole arbitrator appointed by the mutual consent of both parties.

11. MISCELLANEOUS

(a) Severability: If any provision of this Agreement is held to be invalid, the remaining provisions shall continue to be valid and enforceable. (b) Entire Agreement: This document constitutes the entire agreement between the parties and supersedes all prior oral or written understandings. (c) Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original.

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EXECUTION & SIGNATURE BLOCKS

FOR [COMPANY FULL LEGAL NAME]: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

FOR [AGENT FULL LEGAL NAME]: Signature: _____________________________________ Printed Name: [Authorized Signatory Name] Title: [Title / Role] Date: [Date]

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STEP-BY-STEP EXECUTION & FILING GUIDE

1. Customization: Open the template in your word processor. Replace all bracketed text (e.g., [Company Full Legal Name]) with actual data. Ensure all financial percentages and payment terms align with your specific commercial policy.
2. Stamp Duty Compliance: Before printing, verify the applicable Stamp Duty for "Commission Agreements" in your specific Indian state (e.g., Maharashtra, Karnataka, Delhi). Purchase non-judicial stamp paper of the correct value and print the agreement on such paper (or attach an e-stamp certificate).
3. Review: Ensure the "Scope of Services" explicitly defines the limitations of the Agent (e.g., "Agent has no authority to bind the Company to any contract").
4. Execution: Ensure the individual signing for the Company has the Board Resolution or Power of Attorney authorizing them to execute contracts on behalf of the company.
5. Digital Signature: If using digital signatures (DocuSign, Adobe Sign), ensure you comply with the Information Technology Act, 2000, and use Aadhaar-based eSign or equivalent DSC to ensure validity.
6. Record Retention: Maintain the signed original in your physical corporate records for at least 7 years post-termination to satisfy audit and tax requirements under the Companies Act and GST laws.