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Alabama Law Protects Sales Representatives And Their Right to Commissions

Alabama Law Protects Sales Representatives And Their Right to Commissions

Alabama Sales Representative's Commission Contracts ActThe case is all too common. A manufacturer hires an independent sales representative. The sales representative works hard to bring in an important customer. Yet, once the manufacturer thinks the customer relationship is secure, the manufacturer cuts out the sales representative in an effort to increase its profits.

The manufacturer never paid an employee a salary to find, cultivate, or secure the valuable customer. The manufacturer never incurred costs to locate the customer. Instead, the manufacturer had an agreement with an independent sales representative to pay commissions based on the sales generated by the relationship. What the manufacturer often wants is the profit of a customer relationship with no expense, including the expense of paying the agreed-upon sales commissions. This scenario – the clear abuse of the relationship between a manufacturer and its independent representative – has occurred so often that the Alabama Legislature enacted a special statute, the Alabama Sales Representative’s Commission Contracts Act, to address it.  Our courts have addressed the Act and its protections in cases like Lindy Manufacturing Company v. Twentieth Century Marketing, Inc., 706 So.2d 1169 (Ala. 1997).

Our legislature considered it so important to remedy this abuse, it crafted a statute that allows treble damages plus attorneys’ fees. The statute and its protections are vitally important to Alabama’s economy. The local economy, especially in the Huntsville area, is largely based on the development, production, and sales, of advanced technological products. Independent sales representatives often cultivate and secure the long-term customer relationships that fuel business growth. These independent representatives spend considerable time and effort connecting global manufacturers to their customers.

When cost cutting measures involve breaching a prior agreement or denying someone their proper compensation, it is wrong. When this happens, the sales representatives often simply give up. In Alabama, they don’t have to walk away from their hard work. This is one scenario where Alabama law genuinely protects the victim.