Commission Guarantee Agreement Template for United States

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Key Requirements PROMPT example:

Commission Guarantee Agreement

"I need a Commission Guarantee Agreement for our new sales team in California, guaranteeing minimum monthly commissions of $5,000 for the first six months of 2025, with performance targets and clawback provisions if they leave within the guarantee period."

Document background
The Commission Guarantee Agreement serves as a critical tool in industries where commission-based compensation is common. This document, governed by U.S. federal and state laws, provides security to commission-based workers by ensuring a minimum level of earnings during specified periods, such as when starting a new role or during market downturns. The agreement typically outlines guaranteed amounts, performance requirements, payment schedules, and conditions under which the guarantee may be terminated. It's particularly valuable for attracting and retaining top talent in competitive industries while providing clear parameters for both parties' obligations.
Suggested Sections

1. Parties: Identification of the guarantor and beneficiary

2. Background: Context of the commission arrangement and reason for guarantee

3. Definitions: Key terms including Commission, Guarantee Period, Payment Terms

4. Guarantee Terms: Specific details of the commission guarantee including amount and conditions

5. Payment Terms: Timing and method of commission payments

6. Duration: Period during which the guarantee remains valid

7. Termination: Circumstances under which the agreement can be terminated

Optional Sections

1. Performance Conditions: Specific targets or conditions that must be met for the guarantee to apply

2. Clawback Provisions: Terms for recovering paid commissions in cases of early termination or breach

3. Non-Compete Clause: Restrictions on competitive activities during and after the agreement period

Suggested Schedules

1. Schedule 1 - Commission Structure: Detailed breakdown of commission rates and tiers

2. Schedule 2 - Performance Metrics: Specific targets and measurement criteria for performance-based conditions

3. Schedule 3 - Payment Schedule: Detailed timeline and process for commission payments

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

Relevant legal definitions
Industries

Fair Labor Standards Act (FLSA): Federal law governing wage and compensation requirements that must be considered when structuring commission payments

Internal Revenue Code: Federal tax regulations that affect how commission payments are taxed and reported

Securities Exchange Act: Federal law that must be considered if the commission agreement involves securities sales

State Labor Laws: State-specific regulations governing wages and commissions, including payment timing and disclosure requirements

State Contract Laws: State-specific rules governing contract formation, enforcement, and interpretation

State Statute of Frauds: State requirements regarding which contracts must be in writing to be enforceable

Industry-Specific Regulations: Specialized rules for specific sectors such as real estate, insurance, and financial services commission structures

Uniform Commercial Code (UCC): Standardized commercial laws adopted by states that may affect commission agreements related to goods

Common Law Contract Principles: Fundamental legal principles governing contract formation, including offer, acceptance, consideration, and performance

Employment Classification Laws: Regulations governing independent contractor versus employee classification and their impact on commission structures

Non-Compete Regulations: State-specific rules regarding the enforceability of non-compete and non-solicitation provisions in commission agreements

Statute of Limitations: Time limits for bringing legal claims related to commission disputes or contract breaches

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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