Commission agreement – how does commission work and what should the agreement include?
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Short answer: A commission agreement is used when a commission agent sells or buys movable property in their own name but on behalf of another person, the principal. The agreement should clearly regulate the scope of the assignment, commission, accounting, inventory, risk, credit losses, returns, termination, and what happens to goods and customer receivables when the partnership ends.
| Commission agent | Acts in their own name towards customers or suppliers. |
| Principal | The party for whose financial account the transaction is made. |
| Legal basis | The Commission Act (2009:865) applies to assignments to buy or sell movable property in one's own name on behalf of another. |
| Freedom of contract | In B2B relationships, the parties can to a large extent agree on how the cooperation should function, subject to the limitations of mandatory rules. |
The difference between commission and ordinary resale
In ordinary resale, the reseller typically buys the goods for their own account and sells them on. In a commission, however, the commission agent acts in their own name but on behalf of the principal. This difference affects, among other things, accounting, ownership, risk distribution, and how the parties must handle inventory and sales proceeds.
What should a commission agreement regulate?
- which goods or purchases the assignment covers,
- territory, customer groups, and any exclusivity,
- pricing and authority to grant discounts,
- commission, settlement, and payment flows,
- stockkeeping, inventory, and insurance,
- who bears credit risk and the cost of returns,
- reporting, auditing, and access to sales data,
- marketing and use of trademarks,
- confidentiality and trade secrets,
- agreement term, termination, and winding up.
Commission and settlement must be verifiable
A recurring problem in commission relationships is that the commission is described too briefly. The agreement should specify the basis of calculation, when commission is earned, which deductions are permitted, how returns affect the commission, and when the commission agent must submit a settlement.
Inventory and ownership
If the commission agent holds a stock of the principal's goods, the agreement needs to describe labeling, inventory, liability for damages, insurance, and how the goods should be handled at the end of the agreement. It is also wise to regulate what happens in the event of insolvency or dispute.
Competition law and exclusivity
Exclusivity and non-compete clauses should be assessed specifically. Vertical agreements may be subject to competition rules if they restrict the parties' market behavior in an impermissible way.
Commission Agreement 2026/2027 – Swedish and English
The template package is designed for B2B commissions and contains Word/PDF, an English version, and structured clauses for commission, inventory, risk, reporting, and termination.
FAQ
Is commission the same thing as commercial agency?
No. A commission typically involves the commission agent acting in their own name. A commercial agent brokers or enters into agreements on behalf of the principal under a different regulatory framework.
Can the parties contract out of the Commission Act?
In commercial relationships, there is significant freedom of contract, but certain provisions and other legal rules may still be mandatory or limit the agreement.
Does the agreement need to regulate consignment?
If goods are placed with the commission agent without the ownership transferring immediately, inventory, risk, insurance, and return must be described very clearly.
This article provides general information and does not replace individual legal advice. Rules, collective agreements, industry terms, and the circumstances of the individual case can affect the assessment.
