Commission Payment

February 21, 2024

Upon reviewing the agreement, there are a few potential risk areas that you, as Tintoy Limited Liability Company, should consider:

  1. Commission Payment: The agreement states that Seller (Tintoy LLC) agrees to pay Agent a commission of 10% of the gross purchasing amount received from each customer referred by the Agent. However, it doesn’t specify any conditions or limitations on the commission, such as a cap or maximum payout. This could potentially result in a significant financial liability for your company if there are high-value referrals or a large number of referrals. It may be prudent to include provisions to address commission limitations or thresholds to mitigate potential risks.
  2. Referral Quality: The agreement mentions that Agent agrees to use reasonable efforts to ensure that referrals made are likely to result in completed purchasing orders. However, it lacks specific criteria or guidelines to define what constitutes a qualified referral. This ambiguity could lead to disputes or disagreements between the parties regarding the quality and suitability of referrals. It would be beneficial to include clear criteria for qualified referrals to minimize the risk of disputes.
  3. Confidentiality: While the agreement contains a confidentiality provision, it does not explicitly outline the consequences or remedies in case of a breach. It may be advisable to include specific provisions addressing the remedies, including injunctive relief or monetary damages, in the event of a breach of confidentiality to protect your company’s sensitive information adequately.
  4. Indemnification: The agreement places the responsibility of indemnification on the Agent for any claims, losses, damages, liabilities, and expenses arising from Agent’s activities under the agreement, except for cases of Seller’s gross negligence or willful misconduct. While it is generally reasonable to include indemnification clauses, it’s important to ensure that the scope of indemnification is fair and reasonable for both parties. It would be wise to review the indemnification provision with legal counsel to ensure it adequately addresses potential risks.
  5. Term and Termination: The agreement states that either party may terminate the agreement upon thirty days’ written notice. However, it does not specify the consequences or obligations upon termination. It would be beneficial to include provisions addressing the rights and obligations of the parties upon termination, such as the treatment of pending referrals or ongoing commission payments.
  6. Compliance with Laws and Ethical Standards: While the agreement mentions that the Agent will comply with all applicable laws, regulations, and ethical standards, it does not provide specific details or reference any specific laws or ethical standards. Consider incorporating a provision that explicitly requires the Agent to adhere to relevant laws, regulations, and ethical standards governing their activities as a licensed real estate agent in the state of New York.
  7. Limitation of Liability: The agreement does not contain a limitation of liability clause. It may be prudent to include a provision that limits the liability of each party to the extent permitted by law, particularly with regard to any indirect, incidental, or consequential damages that may arise from the performance or non-performance of the agreement.
  8. Dispute Resolution: The agreement does not include a dispute resolution mechanism, such as mediation or arbitration, to address potential disputes between the parties. Including a provision that outlines a preferred method of resolving disputes can help mitigate the risk of costly litigation and promote a more efficient resolution process.

 

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