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Draw Against Commission Agreement

Draw Against Commission Agreement Template for Australia

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Key Requirements PROMPT example:

Draw Against Commission Agreement

"I need a Draw Against Commission Agreement for my real estate agency operating in Sydney's Eastern Suburbs, with a monthly draw of $5,000 against a 45% commission rate on property sales, starting March 1, 2025."

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Document background
The Draw Against Commission Agreement is primarily used in sales-driven industries where representatives earn commission-based compensation but require stable periodic income. This document is essential when establishing a structured payment system that provides regular advances against future commissions while protecting both parties' interests. It is particularly relevant in the Australian business context, where it must comply with federal and state employment laws, including the Fair Work Act 2009 and relevant state-based regulations. The agreement typically includes detailed provisions for commission calculations, draw amounts, reconciliation periods, deficit handling, and termination conditions. It's commonly used when onboarding new sales representatives or restructuring existing compensation arrangements to provide income stability while maintaining performance incentives.
Suggested Sections

1. Parties: Identifies and defines the parties to the agreement

2. Background: Sets out the context and purpose of the agreement

3. Definitions and Interpretation: Defines key terms and establishes interpretation principles

4. Appointment and Scope: Establishes the basic commercial relationship and scope of services

5. Commission Structure: Details the commission rates, calculation methods and qualifying criteria

6. Draw Mechanism: Specifies the draw amount, frequency and conditions

7. Reconciliation Process: Outlines how and when draws are reconciled against earned commissions

8. Payment Terms: Details timing of payments, method, and handling of deficits

9. Obligations and Duties: Sets out the key responsibilities of both parties

10. Term and Termination: Specifies duration and termination provisions

11. Repayment of Unearned Draws: Addresses handling of outstanding draw balances upon termination

12. Confidentiality: Protects confidential information of both parties

13. General Provisions: Standard boilerplate clauses including governing law, notices, etc

Optional Sections

1. Non-Competition and Non-Solicitation: Restricts competitive activities - include when protecting client relationships is crucial

2. Minimum Performance Requirements: Sets performance targets - include when specific metrics are required

3. Training and Support: Details any training provided - include when specific training is part of the arrangement

4. Expense Reimbursement: Covers business expense handling - include when expenses are reimbursable

5. Insurance Requirements: Specifies required insurance coverage - include for high-risk activities

6. Intellectual Property: Addresses IP ownership - include when IP creation is involved

7. Dispute Resolution: Sets out specific dispute handling procedures - include for high-value agreements

Suggested Schedules

1. Commission Rates Schedule: Detailed breakdown of commission rates by product/service type

2. Draw Calculation Formula: Mathematical formula and examples for calculating draws

3. Performance Targets: Specific metrics and targets for commission qualification

4. Territory/Client List: Definition of geographical territory or assigned client base

5. Product/Service Schedule: List of products/services covered by the agreement

6. Reconciliation Statement Template: Format for periodic reconciliation reports

7. Company Policies: Relevant company policies incorporated by reference

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Applicable Laws
Business Day
Commission
Commission Period
Confidential Information
Draw
Draw Amount
Draw Period
Deficit
Earned Commission
Effective Date
Eligible Sales
Force Majeure Event
Gross Sales
Initial Term
Intellectual Property Rights
Material Breach
Minimum Performance Requirements
Net Sales
Notice
Payment Date
Performance Targets
Principal
Products
Qualifying Revenue
Reconciliation Period
Reconciliation Statement
Representative
Sales Territory
Services
Term
Termination Date
Unearned Commission
Working Hours
Clauses
Appointment
Term
Commission Structure
Draw Mechanism
Payment Terms
Reconciliation
Performance Requirements
Territory Rights
Obligations and Duties
Exclusivity
Reporting Requirements
Records and Audit
Confidentiality
Non-Competition
Non-Solicitation
Intellectual Property
Representations and Warranties
Indemnification
Insurance
Force Majeure
Termination
Post-Termination Obligations
Assignment
Notices
Governing Law
Dispute Resolution
Entire Agreement
Severability
Amendment
Waiver
Counterparts
Survival
Compliance with Laws
Data Protection
Relationship of Parties
Relevant Industries

Real Estate

Financial Services

Insurance

Retail

Automotive Sales

Medical Device Sales

Pharmaceutical Sales

Technology Sales

Advertising and Media

Manufacturing and Distribution

Professional Services

Telecommunications

Relevant Teams

Sales

Human Resources

Legal

Finance

Payroll

Compliance

Operations

Business Development

Commercial Operations

Risk Management

Relevant Roles

Sales Representative

Business Development Manager

Account Executive

Sales Agent

Territory Manager

Regional Sales Manager

Commission-based Consultant

Sales Director

Commercial Manager

Distribution Agent

Independent Sales Contractor

Sales Team Leader

Industries
Fair Work Act 2009 (Cth): Governs employment relationships and minimum entitlements, relevant for ensuring the commission structure meets minimum wage requirements
Australian Securities and Investments Commission Act 2001: Regulates financial services and products, including commission arrangements in certain industries
Competition and Consumer Act 2010: Ensures fair trading practices and protects against unconscionable conduct in business relationships
Income Tax Assessment Act 1997: Governs the tax treatment of commission payments and advances
Contract Law (Australian Common Law): Establishes fundamental principles for contract formation, enforcement, and remedies
State-specific Fair Trading Acts: State-level legislation governing fair trading practices and business conduct
Corporations Act 2001: Relevant for business structures and corporate obligations in commission arrangements
Independent Contractors Act 2006: May be relevant if the agreement is structured as an independent contractor relationship rather than employment
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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