Opinion ID: 146068
Heading Depth: 1
Heading Rank: 9

Heading: The Michigan Sales Representative Commission Act

Text: The district court held that the SRCA applied to the without cause payment authorized in Section 7.2 of the Agreement. This was error. The SRCA states that a principal is liable to the sales representative for actual damages, and if the principal is found to have intentionally failed to pay the commission when due, an amount equal to 2 times the amount of commissions due but not paid as required by this section or $100,000.00, whichever is less. M.C.L. § 600.2961(5). The statute defines commission as compensation accruing to a sales representative for payment by a principal, the rate of which is expressed as a percentage of the amount of orders or sales or as a percentage of the dollar amount of profits. M.C.L. § 600.2961(1)(a). Section 6.1 describes the commission limiting it to those sales substantially attributable in whole or in part to activities and services performed prior to the effective date of termination, regardless of the shipment and invoice date. The Agreement next provides a penalty for termination without cause. Section 7.2 states: If [Dogswell] terminates agency while [Profit Pet] is performing quarterly goals, [Profit Pet] is to receive 1 [year's] worth of commissions based on previous 6 month sales. Although the penalty payment is calculated based upon the previous six months' sales, Profit Pet has already been paid a commission on those sales. In other words, Profit Pet, having already been paid the last six months' commissions on its sales, is entitled under the Agreement to receive an additional payment equaling a year's worth of commissions as damages for the termination of its agencynot for additional work done or sales accomplished. The one year's commission is a contractual penalty, not a commission envisioned by the SRCA, and the SRCA simply does not apply. Any argument to the contrary is barking up the wrong tree, and a misreading of both the Agreement and the statute.