Articles Tagged with commissions

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Independent-sales-representative-300x300My law partner just completed a case for an independent sales representative in Huntsville. While every case is unique, the basic story of manufacturers denying commissions to independent sales representatives is far too common. It is a basic story I addressed previously on this blog. It’s a common story I’ve discussed in numerous articles. As I wrote previously, “what the manufacturer often wants is the profit of a customer relationship with no expense, including the expense of paying the agreed-upon sales commissions.”

In Biblical terms, we often read of sowing the seeds, tending the fields, and then eventually reaping the harvest. The farmer working in the fields rises early. He works countless hours to plant and tend the fields. He earns nothing during this time. Yet, with much hard work (and a little cooperation from the weather) harvest comes. That is the time of reward. It is the same with independent sales representatives.

These representatives work hard for their manufacturer clients. They search for business opportunities. They cultivate these opportunities. They invest years of their own time and resources. Then, only after much personal work and investment, a deal is made that greatly benefits the manufacturer. This is the point when everyone should receive their reward. That means everyone, including the sales rep who worked so hard for the deal. For the sales representatives this means they should receive their hard-earned commissions.

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Alabama Sales Representative's Commission Contracts ActThe case is all too common. A manufacturer hires an independent sales representative. The sales representative works hard to bring in an important customer. Yet, once the manufacturer thinks the customer relationship is secure, the manufacturer cuts out the sales representative in an effort to increase its profits.

The manufacturer never paid an employee a salary to find, cultivate, or secure the valuable customer. The manufacturer never incurred costs to locate the customer. Instead, the manufacturer had an agreement with an independent sales representative to pay commissions based on the sales generated by the relationship. What the manufacturer often wants is the profit of a customer relationship with no expense, including the expense of paying the agreed-upon sales commissions. This scenario – the clear abuse of the relationship between a manufacturer and its independent representative – has occurred so often that the Alabama Legislature enacted a special statute, the Alabama Sales Representative’s Commission Contracts Act, to address it.  Our courts have addressed the Act and its protections in cases like Lindy Manufacturing Company v. Twentieth Century Marketing, Inc., 706 So.2d 1169 (Ala. 1997).

Our legislature considered it so important to remedy this abuse, it crafted a statute that allows treble damages plus attorneys’ fees. The statute and its protections are vitally important to Alabama’s economy. The local economy, especially in the Huntsville area, is largely based on the development, production, and sales, of advanced technological products. Independent sales representatives often cultivate and secure the long-term customer relationships that fuel business growth. These independent representatives spend considerable time and effort connecting global manufacturers to their customers.

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