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A Commission Agreement sets out the terms under which a sales agent or representative earns payment for successfully closing deals or bringing in business. In Nigeria's commercial landscape, these contracts specify the commission rate, payment schedule, and performance targets while following guidelines set by the Sales Representatives Agreement Act.

Beyond basic compensation details, these agreements protect both parties by clearly defining what counts as a successful sale, how long commission rights last, and when payments become due. They're especially common in real estate, insurance, and retail sectors, where Nigerian businesses rely heavily on commission-based sales teams to drive growth.

Use a Commission Agreement any time you're bringing sales representatives into your Nigerian business���especially before they start approaching customers or closing deals. This protects your company from disputes by clearly documenting how and when commissions are earned, calculated, and paid out.

The agreement becomes particularly important when working with multiple sales agents, entering new markets, or launching commission-based incentive programs. Nigerian law requires clear documentation of sales compensation terms, so having this agreement in place helps ensure compliance while giving your sales team confidence about their earning potential.

• Standard Sales Commission: The most common type, outlining basic sales targets and percentage-based rewards for individual representatives. Popular in retail and real estate.
• Tiered Commission Structure: Features increasing commission rates as sales volumes grow, often used by Nigerian insurance companies and financial services firms.
• Team-Based Commission: Distributes commissions across sales teams or departments, common in corporate environments and larger organizations.
• Export Commission: Specifically designed for international trade representatives selling Nigerian goods abroad, with provisions for foreign currency payments.
• Hybrid Commission: Combines fixed salary with performance-based commission, widely used in telecommunications and banking sectors.

• Sales Representatives: The primary beneficiaries who earn commissions based on their sales performance and must comply with the agreement's terms
• Business Owners: Draft and implement these agreements to structure their sales compensation programs and protect company interests
• HR Managers: Oversee the administration of commission structures and ensure compliance with Nigerian labor laws
• Legal Counsel: Review and customize agreements to align with Nigerian commercial regulations and protect both parties
• Finance Teams: Calculate, track, and process commission payments according to the agreement's terms

• Sales Structure: Define your commission rates, payment schedules, and any performance tiers or bonuses
• Representative Details: Gather full contact information and registration details for all sales agents involved
• Territory Mapping: Outline specific geographical areas or market segments where the agent can operate
• Performance Metrics: Establish clear, measurable targets and how sales will be tracked and verified
• Payment Terms: Specify commission calculation methods, payout timing, and any conditions affecting payment
• Compliance Check: Review Nigerian labor laws and sales regulations to ensure your agreement aligns with local requirements

• Party Information: Complete legal names, addresses, and registration details of both company and sales representative
• Commission Structure: Detailed breakdown of rates, calculation methods, and payment schedules
• Performance Terms: Clear definitions of what constitutes a sale and when commissions become payable
• Territory Rights: Specific geographical or market boundaries where the agreement applies
• Duration & Termination: Agreement length, renewal terms, and conditions for ending the relationship
• Dispute Resolution: Nigerian jurisdiction clause and agreed methods for resolving disagreements
• Confidentiality: Protection of trade secrets and customer information under Nigerian data protection laws

A Commission Agreement differs significantly from an Agency Agreement in several key ways, though both deal with representatives acting on behalf of a business. While a Commission Agreement focuses specifically on sales-based compensation, an Agency Agreement covers a broader scope of authority and responsibilities.

• Scope of Authority: Commission Agreements primarily deal with sales and compensation terms, while Agency Agreements grant broader powers to represent and act on behalf of the principal
• Payment Structure: Commission Agreements focus exclusively on performance-based compensation, while Agency Agreements may include fixed fees, expenses, and various payment arrangements
• Legal Obligations: Agency Agreements create a fiduciary relationship with more extensive duties and responsibilities under Nigerian law, while Commission Agreements mainly govern sales performance and payment terms
• Duration: Commission Agreements typically align with specific sales periods or targets, while Agency Agreements often establish longer-term business relationships