Say you're onboarding a new client and need everything in writing. That's exactly what a Commission Agreement is for. It lays out the terms, spells out each party's responsibilities, and gives you something enforceable if someone doesn't hold up their end. We're talking about a real legal document here, not just a handshake.

In practical terms, this agreement typically covers details like party type, representative address, effective date, and company address. Each of these elements serves a specific purpose — leave one out, and you might have gaps that come back to bite you. The goal isn't to create unnecessary paperwork. It's to make sure everyone's on the same page before any money changes hands or obligations kick in.

People sometimes confuse this with a simpler handshake arrangement, but there's a real legal difference. A Commission Agreement creates enforceable obligations that courts recognize. When you're partnering with a co-founder, the stakes are high enough that verbal agreements won't cut it. State laws vary on specifics — what's required in California might differ from Texas or New York — but the core principle is universal: written terms beat unwritten ones every time.

And unlike a simple handshake, a Commission Agreement gives you legal standing if something goes wrong. That's not pessimism — that's just being practical. The peace of mind alone makes it worth the effort.

Life throws curveballs. Here's when you'll want this ready. When you're licensing your product, this isn't optional. It's how you protect yourself. Anyone onboarding a new client should have this in place before things move forward.

And it doesn't have to be a massive deal to warrant one. Even at the $5,000 level, having terms in writing prevents the kinds of arguments that ruin business relationships. Over 6 months, a lot can change — and this document keeps everyone accountable to the original terms.

There are also less obvious triggers. A change in business structure, a new partnership forming, or an existing arrangement that's been running on trust alone for too long. If you've been operating without agreement and things have been fine — great. But the moment something shifts, you'll wish you'd put terms on paper back when everyone was still getting along. It's always easier to draft these when the relationship is good.

Here's what happens when people skip this step: everything's fine until it isn't. And by then, you're trying to reconstruct terms from memory, emails, or text messages. Courts aren't impressed by that. Get it in writing upfront.

You don't need a 50-page document, but you do need these pieces. Start with the fundamentals: representative address, party type, effective date. These are non-negotiable. But the difference between a agreement that protects you and one that doesn't comes down to the details you include beyond the basics.

Then there's company address, company name, agreement term — details that seem minor until there's a disagreement. When $100,000 is on the table, you can't afford ambiguity. Lock down the payment schedule, spell out the late fee ($25 flat fee is typical), and make sure both parties know exactly what's expected.

Then there's the stuff nobody thinks about until it matters. What happens if one party wants to make changes mid-arrangement? You need an amendment clause — something that says modifications require written agreement from both sides. Without it, someone can claim you verbally agreed to change the terms. Also consider force majeure provisions. Events outside anyone's control — natural disasters, pandemics, government shutdowns — shouldn't automatically put someone in breach.

One element people consistently overlook: the dispute resolution clause. Specify whether disagreements go to mediation, arbitration, or straight to court. It can save thousands in legal fees. Also — signatures, dates, and a governing law clause. Without those, you've got a suggestion, not a agreement. A few minutes of preparation here can save you months of headaches later.