Georgia 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 Georgia’s laws protecting independent manufacturers’ sales representatives, as of January 1, 2023.
The Georgia Wholesale Distribution by Out-of-State Principal Act
Georgia Statutes, Ga. Code Ann. § 10-1-700
As used in this article, the term:
(1) “Commission” means compensation accruing to a sales representative for payment by a principal, 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.
(2) “Principal” means a person who does business in this state and who:
(A) Manufactures, produces, imports, or distributes a tangible product for wholesale;
(B) Contracts with a sales representative to solicit orders for the product; and
(C) Compensates the sales representative in whole or in part by commission.
(3) “Sales representative” means a person who contracts with a principal to solicit wholesale orders and who is compensated in whole or in part by a commission, but such term does not include one who places orders or purchases for his or her own account for resale.
Georgia Statutes, Ga. Code Ann. § 10-1-701
Georgia Statutes, Ga. Code Ann. § 10-1-702
(a) When a contract between a principal and a sales representative is terminated, the principal shall within 30 days after the termination of the contract pay all commissions due to the sales representative.
(b) A principal who fails to make timely payment of commissions as required by subsection (a) of this Code section shall be liable to the sales representative in a civil action for:
(1) All amounts due to the sales representative according to the terms of the contract;
(2) Exemplary damages in an amount not to exceed double the amount not timely paid as required by subsection (a) of this Code section; and
(3) Reasonable attorney’s fees actually and reasonably incurred by the sales representative in the action.
(c) A person who brings an action under this Code section shall, if the court determines that the action is frivolous, be liable to the defendant for attorney’s fees actually and reasonably incurred by the defendant in defending against such action.
Georgia Statutes, Ga. Code Ann. § 10-1-703
The provisions of this article may not be waived; and, in applying the provisions of this article, the courts of this state shall not recognize any purported waiver of the provisions of this article, whether by expressed waiver or by attempt to make a contract or agreement subject to the laws of another state.
Georgia Statutes, Ga. Code Ann. § 10-1-704
A principal who is not a resident of this state and who enters into a contract subject to this article is declared to be doing business in this state for purposes of the exercise of personal jurisdiction over nonresidents under Code Section 9-10-91.
Georgia, 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 Georgia 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.