Frequently
Asked Questions
It depends on the language in the contract but many contracts are terminable on 30 day notice. However, even though a contract may be terminated on 30 day notice, the Principal can be held liable for a Bad Faith termination if the primary purpose of the termination was to avoid the payment of commissions that have been earned or will be earned in the near future. The law pertaining to such Bad Faith claims varies from state to state and jurisdiction to jurisdiction.
That depends on many factors, including whether or not the contract explicitly addresses the right to commissions after termination. If it does, then the sales rep will be limited to whatever they agreed to in the contract. If it does not, however, a sales rep may be able to avail themselves of the Procuring Cause Doctrine, which allows a claim for commissions on any sales that occur after termination, if those sales can be attributed to the rep’s services prior to termination. Successful Bad Faith claims can also extend the right to commissions on post-termination sales past the date the contract identifies.
If House Accounts are allowable under the written contract, then a Principal may be able to take a customer as a House Account, and not pay commissions for sales to that customer. However, the contract must be reviewed to ascertain whether a House Account can be taken, if there’s a notice period before a House Account can be taken, whether the rep has rights that can be triggered by the taking of a House Account, and other factors.
A majority of the States in the U.S. have statutes that allow sales reps to recover more than simply the commissions they are owed if their Principal breaches their contract. These statutes award anywhere from double to quadruple the contract damages proven, if the conditions for awarding such damages are met. Many of the states also award attorney fees if the sales rep prevails in the litigation.
Anywhere from 1 month if the principal acknowledges their wrongdoing and agrees to pay a settlement; up to several years if the case is not settled and goes all the way to trial. In between those junctures are when most cases settle, typically within 6-9 months.
Our firm’s philosophy is to try everything possible to avoid a lawsuit and settle matters out-of-court. Sometimes that is not possible, in which case a lawsuit may become necessary to gain the leverage to collect damages in a settlement or to win a judgment.
Typically, never. The majority of our lawsuits settle within the first 6-9 months, in which case there are no court appearances for our clients. If the dispute does not settle, then typically the client will first have to appear in court at the trial.
Many times, our sales rep clients are still under contract and don’t want to jeopardize other commissions besides the ones in dispute. So, it is always our protocol to reach out via correspondence and then carefully negotiate a settlement of disputed commission claims without disrupting the
principal-rep relationship.
We have several different retainer agreements, including hybrid contingent fee agreements requiring only $1800 total out-of-pocket fees for the client. Hourly fee structures are also available when preferred.
