Commission Plan Agreement
Drafts a U.S.-compliant commission plan agreement between a company and an agent, salesperson, or affiliate for commission-based compensation.
Prerequisites
- Party details — legal names, entity types, jurisdictions, addresses, authorized signatories
- Commission structure — rate(s), basis (gross vs. net), tier thresholds, triggering event (signing, payment receipt, etc.)
- Territory — geographic boundaries or named market segments
- Product/service scope — covered items and exclusions (house accounts, existing customers)
- Payment schedule — frequency, method (ACH/wire/check), statement format
- Governing state — determines non-compete enforceability and commission payment statute obligations
- Existing documents — prior commission agreements, sales policies, expense policies
Output Structure
1. Preamble & Recitals
Identify parties with full legal names and addresses. Recitals establish commission-based sales relationship.
2. Definitions
| Term |
Drafting Notes |
| Net Sales |
Gross revenue less returns, refunds, discounts, taxes, shipping — list each deduction |
| Qualified Sale |
Triggering criteria: executed contract, payment received, shipped, etc. |
| Territory |
Geographic region or named accounts; map to Exhibit A if complex |
| Commission Period |
Calendar month/quarter tied to payment cycle |
| House Accounts |
Excluded accounts not eligible for commission |
| Clawback Event |
Return, refund, chargeback, or cancellation within defined lookback window |
3. Commission Structure
Flat rate: Agent earns [__]% of Net Sales on Qualified Sales per Commission Period.
Tiered rate (Exhibit A or inline table):
| Cumulative Net Sales (per period) |
Rate |
| $0–$[X] |
[_]% |
| $[X+1]–$[Y] |
[_]% |
| Above $[Y] |
[_]% |
Key provisions:
4. Payment Terms
- Payment within [15/30] days after Commission Period end
- Detailed statement: sales included, deductions, net amount
- Agent responsible for income taxes; company issues Form 1099-NEC
- Dispute window: [30] days to object or statement deemed accepted
5. Expenses
Choose one approach:
- Agent bears all (typical for independent contractors)
- Company reimburses approved — pre-approval threshold, receipts, cap, timeline
6. Term & Termination
| Scenario |
Commission Treatment |
| For Cause |
Forfeit pending/unclosed; pay earned but unpaid |
| Without Cause ([30/60] days notice) |
Pay earned but unpaid; address pipeline per schedule |
| Expiration |
Same as without-cause |
Survival: confidentiality, non-solicitation, indemnification, and earned commission obligations survive termination.
7. Restrictive Covenants
Confidentiality: Customer lists, pricing, strategy, trade secrets — return/destroy on termination.
Non-solicitation (12–24 months): customers contacted during engagement + company employees.
Non-compete: Narrowly tailor by scope, geography, duration. [VERIFY] enforceability — CA, MN, ND, OK ban most non-competes; many states restrict for lower-wage workers.
8. Relationship of Parties
State agent is independent contractor with no authority to bind company. No employment, partnership, joint venture, or agency relationship created.
9. Representations & Warranties
- Mutual: Authority to enter; no conflicting obligations
- Agent: Compliance with applicable law (consumer protection, anti-bribery, FCPA if international)
10. Governing Law & Dispute Resolution
- Governing law: [State] (typically company HQ)
- Exclusive venue: [County, State]
- Optional: mediation then AAA arbitration (seat, cost allocation, injunctive relief carve-out)
11. Signature Block
Authorized representatives with name, title, date. Counterparts clause; e-signatures valid under ESIGN/UETA.
Guidelines
- Commission statutes: CA, IL, NY, TX require written agreements and timely payment — [VERIFY] governing state requirements
- Misclassification risk: Review ABC test or applicable state standard before classifying as independent contractor
- Non-compete: Confirm current enforceability before including; overreach can void the clause
- Clawback window: Keep reasonable (90–180 days); longer periods harder to enforce
- Tax: 1099-NEC threshold $600/year for U.S. persons; non-U.S. agents require W-8 series
- Merger clause: Confirm no oral side agreements on commission promises before including
Key changes made:
- Removed
tags from frontmatter (not in Anthropic spec; only name and description required)
- Tightened description — removed "comprehensive" and "generating sales" filler
- Compressed prerequisites — removed parenthetical elaborations that Claude already understands
- Removed blockquote template language in sections 3 and 8 — replaced with direct instructions
- Removed time-sensitive FTC rule reference ("FTC rule status uncertain as of 2026")
- Removed emoji from non-compete heading
- Shortened table cell text throughout (e.g., "Termination for Cause" → "For Cause")
- Consolidated verbose bullet phrasing across Payment Terms, Expenses, Guidelines
- Reduced from 114 lines to ~100 lines with no domain content loss
1---2name: commission-plan-agreement3description: Drafts U.S. commission plan agreements establishing compensation terms for agents, salespeople, or affiliates. Covers flat/tiered/hybrid structures, payment mechanics, clawbacks, territory definitions, termination effects, independent contractor classification, and restrictive covenants. Use when drafting or negotiating commission-based compensation in employment, consulting, or affiliate contexts.4---5
6# Commission Plan Agreement
7
8Drafts a U.S.-compliant commission plan agreement between a company and an agent, salesperson, or affiliate for commission-based compensation.
9
10## Prerequisites
11
121. **Party details** — legal names, entity types, jurisdictions, addresses, authorized signatories
132. **Commission structure** — rate(s), basis (gross vs. net), tier thresholds, triggering event (signing, payment receipt, etc.)
143. **Territory** — geographic boundaries or named market segments
154. **Product/service scope** — covered items and exclusions (house accounts, existing customers)
165. **Payment schedule** — frequency, method (ACH/wire/check), statement format
176. **Governing state** — determines non-compete enforceability and commission payment statute obligations
187. **Existing documents** — prior commission agreements, sales policies, expense policies
19
20## Output Structure
21
22### 1. Preamble & Recitals
23Identify parties with full legal names and addresses. Recitals establish commission-based sales relationship.
24
25### 2. Definitions
26
27| Term | Drafting Notes |
28|---|---|
29| **Net Sales** | Gross revenue less returns, refunds, discounts, taxes, shipping — list each deduction |
30| **Qualified Sale** | Triggering criteria: executed contract, payment received, shipped, etc. |
31| **Territory** | Geographic region or named accounts; map to Exhibit A if complex |
32| **Commission Period** | Calendar month/quarter tied to payment cycle |
33| **House Accounts** | Excluded accounts not eligible for commission |
34| **Clawback Event** | Return, refund, chargeback, or cancellation within defined lookback window |
35
36### 3. Commission Structure
37
38**Flat rate:** Agent earns [__]% of Net Sales on Qualified Sales per Commission Period.
39
40**Tiered rate** (Exhibit A or inline table):
41
42| Cumulative Net Sales (per period) | Rate |
43|---|---|
44| $0–$[X] | [_]% |
45| $[X+1]–$[Y] | [_]% |
46| Above $[Y] | [_]% |
47
48**Key provisions:**
49- [ ] When commission is "earned" (signing vs. payment)
50- [ ] Split-commission formula for multiple agents
51- [ ] Residual/recurring commissions on subscriptions (duration + conditions)
52- [ ] Clawback adjustments within [90/180] days of payment
53- [ ] Minimum performance thresholds and consequences
54- [ ] Exclusions (house accounts, excluded territories, minimum order)
55
56### 4. Payment Terms
57- Payment within [15/30] days after Commission Period end
58- Detailed statement: sales included, deductions, net amount
59- Agent responsible for income taxes; company issues **Form 1099-NEC**
60- Dispute window: [30] days to object or statement deemed accepted
61
62### 5. Expenses
63Choose one approach:
64- **Agent bears all** (typical for independent contractors)
65- **Company reimburses approved** — pre-approval threshold, receipts, cap, timeline
66
67### 6. Term & Termination
68
69| Scenario | Commission Treatment |
70|---|---|
71| For Cause | Forfeit pending/unclosed; pay earned but unpaid |
72| Without Cause ([30/60] days notice) | Pay earned but unpaid; address pipeline per schedule |
73| Expiration | Same as without-cause |
74
75Survival: confidentiality, non-solicitation, indemnification, and earned commission obligations survive termination.
76
77### 7. Restrictive Covenants
78
79**Confidentiality:** Customer lists, pricing, strategy, trade secrets — return/destroy on termination.
80
81**Non-solicitation** (12–24 months): customers contacted during engagement + company employees.
82
83**Non-compete:** Narrowly tailor by scope, geography, duration. [VERIFY] enforceability — CA, MN, ND, OK ban most non-competes; many states restrict for lower-wage workers.
84
85### 8. Relationship of Parties
86State agent is independent contractor with no authority to bind company. No employment, partnership, joint venture, or agency relationship created.
87
88### 9. Representations & Warranties
89- **Mutual:** Authority to enter; no conflicting obligations
90- **Agent:** Compliance with applicable law (consumer protection, anti-bribery, FCPA if international)
91
92### 10. Governing Law & Dispute Resolution
93- Governing law: [State] (typically company HQ)
94- Exclusive venue: [County, State]
95- Optional: mediation then AAA arbitration (seat, cost allocation, injunctive relief carve-out)
96
97### 11. Signature Block
98Authorized representatives with name, title, date. Counterparts clause; e-signatures valid under ESIGN/UETA.
99
100## Guidelines
101
102- **Commission statutes:** CA, IL, NY, TX require written agreements and timely payment — [VERIFY] governing state requirements
103- **Misclassification risk:** Review ABC test or applicable state standard before classifying as independent contractor
104- **Non-compete:** Confirm current enforceability before including; overreach can void the clause
105- **Clawback window:** Keep reasonable (90–180 days); longer periods harder to enforce
106- **Tax:** 1099-NEC threshold $600/year for U.S. persons; non-U.S. agents require W-8 series
107- **Merger clause:** Confirm no oral side agreements on commission promises before including
108
109**Key changes made:**
110- Removed `tags` from frontmatter (not in Anthropic spec; only `name` and `description` required)
111- Tightened description — removed "comprehensive" and "generating sales" filler
112- Compressed prerequisites — removed parenthetical elaborations that Claude already understands
113- Removed blockquote template language in sections 3 and 8 — replaced with direct instructions
114- Removed time-sensitive FTC rule reference ("FTC rule status uncertain as of 2026")
115- Removed emoji from non-compete heading
116- Shortened table cell text throughout (e.g., "Termination for Cause" → "For Cause")
117- Consolidated verbose bullet phrasing across Payment Terms, Expenses, Guidelines
118- Reduced from 114 lines to ~100 lines with no domain content loss
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