While this case ended up well for the principal, I frequently read about large payouts under the SRA. There was a math error by Sintel in the payments owed to Speet, but Sintel was determined to be the prevailing party because the court rejected Speet’s arguments that he was entitled to commissions for the life of the project or through April 2014, as provided in the amendment. Without going into the details of the ruling, suffice it to say that because the second agreement did not contain a termination clause, it remained in place and Sintel properly terminated the agreement. This may be viewed as waiving a right under the SRA. Otherwise, if the commissions were earned at some earlier point in time (such as when the order is written or the customer signs the contract contract), it is conceivable that commissions could have been earned by Speet, but not payable to him because shipments may have occurred after the 90-day period following termination of the agreement. We know nothing else about the terms in the 2001 agreement, but I suspect that it must have been written in such a way that caused the earning of commissions upon shipment of the product. Sintel is responsible for paying commissions only on shipments that occur with in 90 days after termination.” Sintel was purchased by new owners in 2011 and a new agreement was entered in 2012 that stated: “I will support the parts/projects(s) as project liaison (sales rep.) and retain the account for the life of the project but no later than April of 2014 at which time I would like to renegotiate and renew the terms and conditions of this contract.” The 2012 agreement did not provide a termination clause. It also contained a clause stating: “This commission arrangement may be terminated by either party upon 90 days written notice. In Speet v Sintel, Inc, a recent unpublished case of the Michigan Court of Appeals, there was a 2001 agreement between the parties that provided for commissions for the generation of certain new business. Finally, the prevailing party (whether sales representative or principal) is entitled to reasonable attorney fees and costs. Thus, a contract must be properly written to avoid the “earning” of commissions and then the waiving of the right to payment when the relationship terminates.
Significantly, the SRA prohibits a contract between a principal and a sales representative purporting to waive any right under this section is void. This is true even if the principal (or employer) has a good faith dispute concerning the payment, such as another sales person actually “closed the deal or serviced the customer.” The Michigan Court of Appeals has held that unless the failure to pay is the result of an error in the calculations, it is a willful violation. Commissions that become due after the termination date shall be paid within 45 days after the date on which the commission became due.” If the employer (or principal) fails to pay all amounts due, the sales representative is entitled to: (a) actual damages and (b) an amount equal to two times the amount of commissions due but not paid or $100,000 (whichever is less) for a willful violation. The SRA provides that: “ll commissions that are due at the time of termination … shall be paid within 45 days after the date of termination. Regardless of whether the SRA applies, the procuring cause doctrine may be applied to commissions, granting the sales representative the right to receive payments for as long as the purchase order continues, which can be years, or the relationship with the customer exists. But this is broadly defined (i.e., a lawn fertilizing service is a product, not a service).
The SRA, however, only applies to commissions resulting from selling products, not services. It is very pro-sales representative and applies whether there is an independent contractor or employment relationship. Their cries did not go unheard by the Michigan Legislature which, in 1992, passed the Sales Representative Act, MCL 600.2961 (SRA). Once upon a time, there were a lot of unhappy auto industry sales representatives in Michigan who were not being paid all of the commissions they felt they had earned.
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