A partnership commission agreement is a contract between two partners in a business. The commission agreement describes the terms of the relationship and the primary function of this contract is to protect the economic interest of both parties, as well as to promote equal division in decision making. This contract can become a source of dissension between the partners, as each party attempts to persuade the other to agree. Accordingly, there is no set formula for a partnership commission agreement, and therefore one or both parties may feel that the agreement has not been properly negotiated.
Partnership management platforms are critical to ensure partners are working toward the same goals.
It is a type of contract, and as such is governed by a long history of English common law. Historically, English judges have been known to interpret contracts strictly and narrowly; that is, the interpretation should be based upon what was actually written in the contract rather than an interpretation based on any outside sources or policies (such as reasonableness or fairness). The contract should also be interpreted from the point of view of a reasonable party.
This creates a particularly difficult environment for parties attempting to negotiate a partnership commission agreement because no outside source to assist in interpreting the words in the contract other than their own knowledge is allowed. As a result, there are many different interpretations of what clauses should be included in the contract, and what their content should be. Part of the difficulty arises from the fact that there are often many ways to say the same thing. Because contracts are interpreted by judges, each interpretation can be different from all the others. Often each party in a contract disputes this interpretation and will refer to their own preferred version of the document, which they consider more fair or reasonable.
Benefits
The primary benefit of a partnership commission agreement is that it protects the economic interest of both parties. There are two main components to this protection:
Partnership Agreements and other Business documents, such as Business Plans and Job Descriptions, have a long history. They have been used for many years to describe the legal relationship between parties in various types of business and professional relationships. Contracts are used to ensure that each party knows what that party is agreeing to, before entering into the agreement. This can be a particular problem for inexperienced partners. As there is no governing agency with which to file a complaint or dispute, partners must rely on the contract as the basis of their relationship. Thus, it is not surprising that experienced business partners will require a written agreement setting forth the terms of the partnership.
It is designed to address the issues that might arise when two parties enter into business together based upon a principle of profits shared. The Commission Partnership Agreement needs to address issues that have arisen in the past. For example, if a partner was not compensated for services, or if the partner sold products for himself or herself and not the company, those are items that need to be addressed and put into an agreement between partners.
The Commission Partnership Agreement also needs to address what is happening with current profits, as well as future profits. The agreement should also address how partners will deal with each other in regard to decisions made in the course of business operations.
