New Jersey Sales Representatives’ Commissions Statutes
Independent manufacturers’ sales representatives are typically hired by manufacturers, distributors, and importers to solicit orders for their products from potential customers in designated territories in exchange for a sales commission. Such sales representatives often spend many months or years building up a customer base in their assigned territory and incur substantial up-front sales and marketing expenses that can include travel, lodging, entertainment, and trade show expenses with the hope of generating a stream of future commission income. The sales representative is vulnerable if the principal suddenly terminates their relationship and/or fails to pay all commissions owed to the sales rep.
In response to these concerns, starting in the 1980s and 1990s, many states enacted statutes to protect the interests of these independent manufacturers’ sales representatives. These statutes often:
• Require the sales representative agreement to be in writing;
• Require the principal to provide a copy of the written contract to the sales rep;
• Require the principal to pay the sales rep for all commissions owed promptly following termination (or incur liability for statutory penalties, attorney’s fees, and court costs);
• Strictly limit the circumstances under which the principal can terminate, or fail to renew, a sales representative agreement (e.g., requiring the manufacturer to have “good cause” for termination); and/or
• Prohibit the principal from imposing terms (such as choice of law or exclusive venue provisions) in the sales rep agreement that would effectively require the sales rep to waive its statutory protections under the law.
Thirty-five of the fifty states have enacted some form of sales rep protection legislation.
This article sets forth the text of New Jersey’s laws protecting independent manufacturers’ sales representatives, as of January 1, 2023.
The New Jersey Sales Representatives’ Rights Act
New Jersey Statutes, N.J.S.A. 2A:61A-1
As used in this act:
a. “Commission” means compensation accruing to a sales representative for payment by a principal, earned through the last day on which services were performed by the sales representative, the rate of which is expressed as a percentage of the dollar amount of orders or sales or as a specified amount per order or per sale.
b. “Principal” means a person, including a person who does not have a permanent or fixed place of business in this State, who manufactures, produces, imports or distributes a product or offers a service; contracts with an independent sales company or other person to solicit orders for the product or service; and compensates those companies or other persons who solicit orders, in whole or in part, by commission.
c. “Sales representative” means an independent sales company or other person, other than an employee, who contracts with a principal to solicit orders and who is compensated, in whole or in part, by commission but shall not include one who places orders or purchases exclusively for his own account for resale.
d. “Day” means a calendar day including Saturdays, Sundays and legal holidays.
e. “Termination” means the end of services performed by the sales representative for the principal by any means .
f. (Deleted by amendment, P.L.2007, c. 289.)
New Jersey Statutes, N.J.S.A. 2A:61A-2
When a contract between a principal and a sales representative to solicit orders is terminated, the commissions and other compensation earned as a result of the representative relationship and unpaid shall become due and payable within 30 days of the date the contract is terminated or within 30 days of the date commissions are due, whichever is later.
A sales representative shall receive commissions on goods ordered up to and including the last day of the contract even if accepted by the principal, delivered, and paid for after the end of the agreement. The commissions shall become due and payable within 30 days after payment would have been due under the contract if the contract had not been terminated.
New Jersey Statutes, N.J.S.A. 2A:61A-3
a. A principal who violates or fails to comply with the provisions of section 2 of this act1 shall be liable to the sales representative for all amounts due the sales representative, exemplary damages in an amount of three times the amount of commissions owed to the sales representative and all attorney’s fees actually and reasonably incurred by the sales representative in the action and court costs.
b. Where the court determines that an action brought by a sales representative against a principal pursuant to this section is frivolous, pursuant to P.L.1988, c. 46 (C.2A:15-59.1), the sales representative shall be liable to the principal for attorney’s fees actually and reasonably incurred by the principal in defending the action and court costs.
New Jersey Statutes, N.J.S.A. 2A:61A-4
The commissions and other compensation shall be paid at the usual place of payment unless the sales representative requests that the commissions and other compensation be sent through first class mail. If, in accordance with a request by the sales representative, the sales representative’s commissions and other compensation are sent through the mail, the commissions and compensation shall be deemed to have been paid as of the date of their registered postmark.
New Jersey Statutes, N.J.S.A. 2A:61A-5
A principal who is not a resident of this State who contracts with a sales representative to solicit orders in this State is declared to be doing business in this State for purposes of the exercise of personal jurisdiction.
New Jersey Statutes, N.J.S.A. 2A:61A-6
A provision in any contract between a sales representative and a principal purporting to waive any provision of this act, whether by express waiver or by a provision stipulating that the contract is subject to the laws of another state, shall be void.
New Jersey Statutes, N.J.S.A. 2A:61A-7
Nothing in this act shall invalidate or restrict any other or additional right or remedy available to a sales representative or principal, or preclude a sales representative from seeking to recover in one action on all claims against a principal, or preclude a principal from seeking to recover in one action on all claims against a sales representative.
New Jersey Statutes, N.J.S.A. 2A:61A-8
The provisions of P.L.1990, c. 93 (C.2A:61A-1 et seq.) shall not apply to:
a. any real estate sales person licensed or regulated pursuant to chapter 15 of Title 45 of the Revised Statutes;
b. any person licensed or regulated pursuant to subtitle 3 of Title 17 of the Revised Statutes, Title 17B of the New Jersey Statutes or P.L.1973, c. 337 (C.26:2J-1 et seq.); or
c. any person registered or regulated by the New Jersey Bureau of Securities pursuant to the “Uniform Securities Law (1997),” P.L.1967, c. 93 (C.49:3-47 et seq.), or registered or regulated by the Securities and Exchange Commission pursuant to the provisions of the Securities Act of 1933, 15 U.S.C. s.77a et seq., the Securities Exchange Act of 1934, 15 U.S.C. s.78a et seq., the Investment Company Act of 1940, 15 U.S.C. s.80a-1 et seq., or the Investment Advisers Act of 1940, 15 U.S.C. s.80b-1 et seq.
New Jersey, like a majority of states, has enacted sales representative legislation. Manufacturers, distributors, and importers typically bear the burden of compliance with these statutes and should ensure that their contracts and activities are consistent with applicable law. Sales representatives may wish to review applicable laws to understand their rights. If the laws of multiple states are involved, compliance with the relevant law may become even more complicated, and legal advice from a New Jersey sales rep attorney may be appropriate.
About the Author
Craig W. Trepanier is a sales representative attorney who handles disputes under the Minnesota Termination of Sales Representatives Act and the laws of other jurisdictions. He can be reached at firstname.lastname@example.org or at 612.455.0502. Trepanier MacGillis Battina P.A. is a Minnesota sales representative law firm located in Minneapolis. If you need advice regarding your sales representative agreement, or are having a dispute regarding the termination, non-renewal, or modification of a sales rep agreement or unpaid commissions, please contact us. Mr. Trepanier can represent you in the State of Minnesota. If appropriate, we can co-counsel with an attorney in your jurisdiction to leverage our specialized knowledge of sales rep law.