Independent Reps Earn Legal Victory

Edition: September 1999 - Vol 7 Number 09
Article#: 467
Author: Repertoire

On June 25, 1999, Moore & Kimmey, a Texas rep firm that had been terminated, was awarded more than $650,000 in unpaid commissions and attorney fees. It was the first case ever to be tried under the Texas Sales Representative Act.

In Moore & Kimmey vs. Price Pfister, a former sales agency representing a line of faucets manufactured by Price Pfister, a subsidiary of Black & Decker, brought suit alleging that the manufacturer had improperly cut its commissions by half. The claim, which was based on an oral contract, arose after the rep agency repeatedly protested the commission cut.

Represented by the Rydal, PA law firm of Mitchell A. Kramer and Associates, the sales agency not only succeeded on its contract claims, but it also recovered under the Act, which provides for an award of three times the actual amount of unpaid commissions and attorney fees if a sales representative is not paid commissions to which it is entitled within 30 days of being terminated.

Attorneys for the rep agency successfully argued that because the manufacturer had improperly cut its commissions and had failed to pay the full amount of commissions owed within 30 days of termination, the rep agency should recover under the Act.

Texas is by no means the only state to have passed statutes protecting sales representatives and distributors. Some of these statutes require manufacturers to provide written contracts and to pay commissions within a certain period of time after terminating a rep. However, few cases have been brought under such statutes.

Protect Your Rights

Reps can take steps to protect their rights, advise the Kramers:

  • Avoid costly and time-consuming litigation by ascertaining your rights before executing or renewing a contract, and then negotiating the best possible contract.

  • Immediately consult an attorney if a manufacturer that you represent informs you that it intends to cut commissions, reduce your profit margin, unfairly raise quotas, or take any action that significantly changes your contractual rights or obligations. Failure to properly object to such changes could rob you of your legal protection.

  • If you are terminated and believe the termination is im-proper, or believe that you have not been paid all the compensation to which you are entitled, seek legal advice before discussing or corresponding about the matter with the manufacturer.

  • Refrain from cashing any checks from the manufacturer until you have discussed the situation with an attorney, because the act of cashing a check may deprive you of additional remedies.

For additional information, contact Mitchell Kramer at (800) 451-7466 or Barbara Kramer at (734) 327-9822.