A commission agreement is a contract between two parties that stipulates how and when a commission will be paid for services provided by one of the parties. The party providing the service is typically referred to as the agent, while the other party is known as the principal or client. This type of agreement is often used in a sales-oriented business setting where a company hires an external salesperson or broker to represent its interest in earning a profit. The commission agreement will clearly outline all details relating to the job, including expectations, payment conditions, and any special considerations that need to be taken into account. By having a written agreement that both parties recognize, companies can ensure that their interests are protected and that sales goals are met.