A sales representative agreement is a legal contract between two business entities wherein one business entity undertakes to act as a sales representative of the other business entity for a specific product in the assigned territory. Under this arrangement one party undertakes to further the business of the other party in the assigned area and in return gets commission on the basis of volume of sales. The right endowed upon the sales representative may be exclusive or non-exclusive depending on the agreement reached upon between the two entities.
A sales representative agreement in order to be fair and impartial should be prepared with proper due diligence and should give clear explanation on issues such as the product or service, initial investment, distribution of marketing expenses, the time period for which rights are granted, the territory in which sales representative will operate, the exclusivity of the rights,the commission structure, the payment mode and time after which the payment would be made, rights and responsibilities of both the parties. This agreement should aim at smoothing the conduct of business between both parties and facilitating long term mutually beneficial business relationships.
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