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When is a dispute over commissions actionable?

Outside sales Rep (contractor, not employee) has dispute wit sillydood08/10/17
If it isn't in the contract then there isn't anything to wor isthisit08/10/17
Must be nice to get perpetual residuals for initially signin jeffm08/10/17
Check your jurisdiction's wage payment laws. I had a simila pauperesq08/11/17
Can you elaborate on the "didn't meet statutory requirements sillydood08/11/17
He was an out-of-state sales rep. In his particular state, pauperesq08/11/17
Ah, okay thanks. I was only aware of those requirements for sillydood08/11/17
Side question: if rep worked for Client incorporated in stat sillydood08/11/17
Typically, a contractual choice of law provision will be enf jeffm08/11/17
sillydood (Aug 10, 2017 - 1:21 pm)

Outside sales Rep (contractor, not employee) has dispute with Client over commission agreement. This was for sales of services, not goods.

Basically the contract between Rep and Client ended on date x. The contract stipulates that for Rep to get commission on deals that close after date x, the offer had to be pending before the customer on or before date x, and then subsequently close on the same terms. Further, commission is only payable from net invoice price (i.e. what Client actually collects as it invoices for services rendered) not the "contract price."

Client also paid a hefty monthly retainer to Rep.

As of now there is 1 actual proposal/offer before a customer that Rep helped Client with. That customer has not signed, and Client has collected no revenue.

Rep now argues he should get commission on any future deals that close with ALL the customers he introduced Client to, regardless of whether offers were pending before the customer on date x. There are like 20 customers he introduced Client to. His argument is Client is violating spirit of understanding, Client didn't allow him to work with customers so he could get offers to them, blah blah blah. Client's position is they paid him the retainer and that's more than adequate for the introductions he made.

His case against Client seems terrible, but he also seems super pissed. If he lawyered up, would there be any actionable claim right now given none of these potential customers have led to any sales at this point? Aren't damages speculative and there's no cause of action yet?

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isthisit (Aug 10, 2017 - 1:59 pm)

If it isn't in the contract then there isn't anything to worry about.

Rep knew what he was doing when he entered into the agreement and should have contracted for what he's asking for now. So long as client met his obligations to rep, then there's no COA here for rep. Guy needs to not suck at closing deals.

However, without seeing the actual contract and knowing the jurisdiction, this is just my uninformed opinion so YMMV.

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jeffm (Aug 10, 2017 - 8:38 pm)

Must be nice to get perpetual residuals for initially signing up a client. Think about all those suckers who come after you and have to negotiate all new deals with the same client, while you get to watch Jerry Springer and check your mailbox for commissions.

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pauperesq (Aug 11, 2017 - 8:35 am)

Check your jurisdiction's wage payment laws. I had a similar issue not too long ago and we quickly settled with the former sales rep after it became clear that my client's independent contractor agreement didn't meet statutory requirements and we would be on the hook for not only commission payments but also attorney fees.

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sillydood (Aug 11, 2017 - 9:48 am)

Can you elaborate on the "didn't meet statutory requirements" piece? Do you mean the rep was actually an employee?

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pauperesq (Aug 11, 2017 - 10:12 am)

He was an out-of-state sales rep. In his particular state, the wage payment law required that a company must have a written policy regarding how commissions are earned and paid, and that the employee/ind. contractor sign an acknowledgment indicating that he received and understood the policy. That language wasn't anywhere in my client's ICA and, while they had a policy, it was only loosely communicated to the sale rep. and they never had him sign an acknowledgment saying he was aware of it.

We had some basis to litigate since, like your situation, we could argue he didn't do much to earn the commissions, but the threat of having to pay attorney fees if we lost was too much to risk.

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sillydood (Aug 11, 2017 - 11:10 am)

Ah, okay thanks. I was only aware of those requirements for employees not ind. contractors.

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sillydood (Aug 11, 2017 - 11:30 am)

Side question: if rep worked for Client incorporated in state X, Rep was based in state Y, and Rep worked for Client in state Z, which state's commission law applies? Agreement says it'll be interpreted under X law.

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jeffm (Aug 11, 2017 - 11:45 pm)

Typically, a contractual choice of law provision will be enforced.

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