Source: http://www.szuradelonis.com/required-payment-of-sales-commissions-michigans-procuring-cause-doctrine/
Timestamp: 2019-04-20 05:23:02+00:00

Document:
Legal technicalities may not be invoked to avoid paying sales agents’ commissions. That’s the essence of Michigan’s procuring cause doctrine – an equitable doctrine established by Michigan’s supreme court to protect commission based sales agents. This doctrine protects all manner of sales agents including manufacturer’s reps, purveyors of information systems technology and software, employment recruiters, etc. Before it became law principals could avoid paying commissions by terminating agents’ authority strategically, just before sales were consummated. Under the procuring cause doctrine agents are entitled to commissions if their work results in sales, even if they’re “terminated” before a deal goes through. When agents’ work results in sales finalized after their termination, rights to post-termination commissions are generated. Two time frames bear upon commission rights – the time necessary to cultivate the sale, that is, the pre-sale lead time, and the post-sale duration of continuing, recurring, renewal, or installment orders.
The dividends of hard work are often realized over time. For commission based agents pre-sale lead time work is the heavy lifting that can yield fruit. That work remains uncompensated until a sale happens, but once it does, the agent must be paid. Different industries require different measures of pre-sale work with different lead times. Such work can be extensive. Only after the work starts yielding fruit do compensation disputes arise, and when they do the nature and extent of lead time work can bolster agents’ equitable claims to post-termination commissions. From an agent’s perspective – and a judge or jury’s – it’s pretty basic that once one party performs its end of a bargain the other party must perform its end too. That’s what bilateral contracts are all about, reciprocal obligations. Agents seeking commissions therefore naturally emphasize the lead time work done to support their claims. The more time and effort agents spend procuring sales during the lead time, the stronger their claims to commissions.
Also important – do the earned sales have legs? In other words, will a sale result in continuing revenues for a principal (and continuing duty to pay commissions)? Again, much depends on the industry or business sector involved. In the automotive parts industry, product purchase orders last years, sometimes spanning the life of the part for an automobile model run. Other business sectors also have recurring, renewal aspects to their sales too. When an industry’s sales have legs, and revenues continue, principals often shift focus to agents’ account servicing. Perceived deficiencies in contractually required account servicing may be used to justify withholding commissions. Contract language is important. In Michigan, if sales have legs the right to commissions can extend beyond an initial sale or order and result in damages claims that are extensive and open ended.
 Kelso v. Woodruff, 88 Mich. 299 (1891)(real estate sales commissions).
 The general rule under agency law is that a principal may terminate an agent’s authority at any time. Restatement Third Agency § 3.10 (2006).
 In Reed v. Kurdziel, 352 Mich. 287, 294-5 (1958), the court explained that even “if the authority of the agent has been cancelled by the principal, the agent would nevertheless be permitted to recover the commission if the agent was the procuring cause” of the sale. See also, Militzer v. Kal-Die Casting Corp, 41 Mich. App. 492 (1972).
 Negaunee Iron Co. v. Iron Cliffs Co., 134 Mich. 264, 276 (1903), see also, Erickson v. Dart Oil & Gas Corp., 189 Mich. App. 679, 693 (1991).
 Willy Loman, Death of a Salesman, Act 2, Scene 2.

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