Utah Sales Representative Statutes

Utah 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 Utah’s laws protecting independent manufacturers’ sales representatives, as of January 1, 2023.

The Utah Sales Representative Commission Payment Act

Utah Statutes, U.C.A. 1953 § 34-44-101

This chapter is known as the “Sales Representative Commission Payment Act.”

Utah Statutes, U.C.A. 1953 § 34-44-102

As used in this chapter:

(1) “Business relationship” means an agreement that governs the relationship of principal and sales representative.

(2) “Commission” means:

(a) compensation:

(i) that accrues to a sales representative;

(ii) for payment by a principal; and

(iii) at a rate expressed as a percentage of the dollar amount of sales, orders, or profits; or

(b) any other method of compensation agreed to between a sales representative and a principal including:

(i) fees for services; and

(ii) a retainer.

(3)

(a) “Direct sales company” means a person that:

(i) sells, distributes, or supplies for consideration a good or service through participants:

(A) at different levels of distribution; or

(B) in accordance with a formula for compensating participants in whole or in part based on:

(I) the sale of a good or service; and

(II) the recruitment of or the performance or action of another participant; and

(ii)

(A) permits participants to recruit other participants to sell, distribute, or supply for consideration the person’s good or service; or

(B) provides for commission, cross-commissions, override commissions, bonuses, refunds, dividends, or other consideration that is or may be paid as a result of:

(I) the sale of a good or service; or

(II) the recruitment of or the performance or action of another participant.

(b) As used in this Subsection (3), “participant” means an independent agent, contractor, or distributor.

(4) “Principal” means a person who:

(a) engages in any of the following activities with regard to a product or service:

(i) manufactures;

(ii) produces;

(iii) imports;

(iv) sells; or

(v) distributes;

(b) establishes a business relationship with a sales representative to solicit orders for a product or a service described in Subsection (4)(a); and

(5)

(a) Except as provided in Subsection (5)(b), “sales representative” means a person who enters into a business relationship with a principal:

(i) to solicit orders for a product or a service described in Subsection (4)(a); and

(ii) under which the person is compensated, in whole or in part, by commission.

(b) “Sales representative” does not include:

(i) an employee of a principal;

(ii) a person licensed under Title 31A, Insurance Code;

(iii) a person licensed under Title 41, Chapter 3, Part 2, Licensing;

(iv) a person licensed under Title 61, Chapter 2f, Real Estate Licensing and Practices Act;

(v) a person who provides a product or service under a business relationship with a principal that is incident to the purchase or sale of real property;

(vi) a person who places an order or purchases a product or service for that person’s own account for resale; or

(vii) an independent agent, contractor, or distributor through whom a direct sales company supplies for consideration a good or service.

(6) “Terminates” or “termination” means the end of a business relationship between a sales representative and a principal, whether by:

(a) agreement;

(b) expiration of a time period; or

Utah Statutes, U.C.A. 1953 § 34-44-103

An action under this chapter may be brought against a principal in a court of this state if:

(1) the principal enters into a business relationship in this state with a sales representative to solicit orders for a product or a service; or

(2)

(a) a product of the principal is:

(i) manufactured, distributed, sold, or received in this state; or

(ii) imported to or from this state; or

(b) a service of the principal is provided in this state.

Utah Statutes, U.C.A. 1953 § 34-44-104

Any of the following provisions in an agreement between a sales representative and a principal is void:

(1) an express waiver of any right under this chapter;

(2) for a writing required by Section 34-44-201 that is entered into in this state, a provision that makes the sales representative subject to the laws of another state; or

(3) a requirement that the sales representative pursue a claim under this chapter in a court not located in the state.

Utah Statutes, U.C.A. 1953 § 34-44-201

(1) The business relationship between a sales representative and a principal shall be in a writing signed by both the principal and the sales representative.

(2) The writing required by Subsection (1) shall set forth the method by which the sales representative’s commission is:

(a) computed; and

(b) paid.

(3) The principal shall provide the sales representative with a copy of the signed writing required by Subsection (1).

Utah Statutes, U.C.A. 1953 § 34-44-202

(1) The principal shall pay a sales representative all commissions due to the sales representative during the time the business relationship between the principal and sales representative is in effect in accordance with the writing required by Section 34-44-201.

(2) If a business relationship between a principal and sales representative terminates, the principal shall pay to the sales representative:

(a) within 30 days after the day on which the termination is effective, all commissions due on the day on which the termination is effective; and

(b) within 14 days after the day on which a commission becomes due if the commission is due after the day on which the termination is effective.

(3)

(a) Unless payment is made pursuant to a binding and final written settlement agreement and release, the acceptance by a sales representative of a partial commission paid by the principal under the business relationship does not constitute a release as to the balance of any commission that the sales representative claims is due because of the business relationship.

(b) A full release of all commission claims required by a principal as a condition to a partial commission payment is void.

Utah Statutes, U.C.A. 1953 § 34-44-203

If a principal makes a revocable offer of a commission to a sales representative, the sales representative is entitled to the commission agreed upon under the business relationship if:

(1) the principal revokes the offer of commission;

(2) the sales representative establishes that the revocation is for a purpose of avoiding payment of the commission;

(3) the revocation occurs after the principal obtains an order for the principal’s product or service through the efforts of the sales representative; and

(4) the principal’s product or service that is the subject of the order is provided to and paid for by a customer.

Utah Statutes, U.C.A. 1953 § 34-44-301

(1) A sales representative may bring a civil action in a court of competent jurisdiction against a principal for failure by the principal to comply with:

(a) any provision of an agreement relating to the payment of commission; or

(b) Subsection 34-44-202(1) or (2).

(2) If a principal is found liable under Subsection (1), the principal is liable to the sales representative for:

(a) three times an amount calculated by:

(i) determining the sum of unpaid commission owed to the sales representative; and

(ii) subtracting from the amount determined under Subsection (2)(a)(i) money the sales representative owes the principal;

(b) reasonable attorney fees; and

Utah Statutes, U.C.A. 1953 § 34-44-302

This chapter does not:

(1) invalidate or restrict any alternative or additional right or remedy available to a sales representative; or

(2) preclude a sales representative from seeking to recover in an action on all claims against a principal.

Conclusion

Utah, 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 Utah sales rep attorney may be appropriate.

If you are interested in the sales representative statutes of other states, click here to view our sales representative statute survey page.

______________

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 craig@trepanierlaw.com 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.