Commission on failed contract

[GCP404]

Jurisdiction

New York

Hello.
I am a commissioned salesperson that remained after an ownership change almost 3 years ago. I do not have any written commission agreement. Here is the setup: A sale of a product is agreed upon and a deposit is provided by the customer. Before the product can be installed, NY licensing laws have changed and the company can no longer install the product. This will render the deal dead and the customer will be refunded their deposit. Here is the question: Is the employer still obligated to pay my commission? The failure of the deal was not the fault of the salesperson. In fact, it could be said that the fault is on the employer - who was aware of the pending licensing changes yet did not act appropriately. Any legal insight would be appreciated.

 

[Zigner]

It would really depend on the terms of the contract. If *I* were to make a contract with a salesperson, I would make it contingent on the sale being completed, with perhaps a lower commission if it didn't go through. I have no idea what the terms of YOUR contract are, however.

 

[GCP404]

It would really depend on the terms of the contract. If *I* were to make a contract with a salesperson, I would make it contingent on the sale being completed, with perhaps a lower commission if it didn't go through. I have no idea what the terms of YOUR contract are, however.

Thanks for your input. I don't have a sales contract with the new owners. Therefore, nothing is in writing either way. I would presume that it would then be based on NYS law, which I believe states it's a sale if I have a customer ready, willing and able to enter into contract under the employers terms (paraphrasing).

 

[Zigner]

Thanks for your input. I don't have a sales contract with the new owners. Therefore, nothing is in writing either way. I would presume that it would then be based on NYS law, which I believe states it's a sale if I have a customer ready, willing and able to enter into contract under the employers terms (paraphrasing).

Why do you believe that your prior contract didn't transfer to the new owners?

 

[adjusterjack]

Is the employer still obligated to pay my commission?

I'm going out on a limb here and saying that written commission contracts generally require the sale to be complete before the commission is earned and, in the absence of a written contract, you would unlikely be successful in arguing that you are entitled to a commission when no actual sale was completed, regardless of why.

Why do you believe that your prior contract didn't transfer to the new owners?

I saw no indication of any prior contract existing.

I would presume that it would then be based on NYS law, which I believe states it's a sale if I have a customer ready, willing and able to enter into contract under the employers terms (paraphrasing).

I'm guessing you found that in the same "guide" that I found on the internet.

microsoft-word-commissions-faq.doc.pdf (ny.gov)

Unfortunately, many such "guides" are often incorrect.

The latest available NY Labor (LAB) statute says different in Article 6 Section 191-A Definitions:

(b) "Earned commission" means a commission due for services or merchandise which is due according to the terms of an applicable contract or, when there is no applicable contractual provision, a commission due for merchandise which has actually been delivered to, accepted by, and paid for by the customer, notwithstanding that the sales representative's services may have terminated.

New York Labor Law Article 6 (2020) - Payment of Wages :: 2020 New York Laws :: US Codes and Statutes :: US Law :: Justia

Maybe there's a more recent statute to be relied on. You can check with the NY DOL.

If there isn't, you may be entitled to minimum wage for the time you spent on the deal.

I was curious about the discrepancies and, knowing that discrepancies are often adjudicated, I went further and found the following article about a NY case decision which also contradicted the "guide."

Note the penultimate paragraph:

Justice Bransten, in granting summary judgment in favor of ICS and dismissing Linder's complaint, held that based on the parties' decade-long course of dealing which documented how commissions were calculated and the history of ICS only paying commissions to Linder upon payment from customers, there was an implied agreement as to the commission structure and ICS complied with its obligations regarding payment of commissions through the time Linder was eventually terminated.

If the practice of you and your employer was that you got paid when the employer got paid and this has been going on for several years, you might be stuck with the status quo.

When is a Sales Commission "Earned"? - Campolo, Middleton & McCormick, LLP (cmmllp.com)

Reluctant as I am to rely only on articles I have located for your perusal the full case decision of Linder v. Innovative Commercial Sys, LLC as well as Pachter v. Bernard Hodes Group, Inc which is cited in Linder.

Linder v. Innovative Commercial Sys. LLC, 2013 NY Slip Op 51695 - NY: Supreme Court 2013 - Google Scholar

Pachter v. BERNARD HODES, 891 NE 2d 279 - NY: Court of Appeals 2008 - Google Scholar

 

[Disabled Vet]

Thanks for your input. I don't have a sales contract with the new owners. Therefore, nothing is in writing either way. I would presume that it would then be based on NYS law, which I believe states it's a sale if I have a customer ready, willing and able to enter into contract under the employers terms (paraphrasing).

You have answered your question. Last line... Willing and able to enter into a CONTRACT under the employers terms. No CONTRACT was done since the job fell through. You can't pay commissions on something that didn't happen. A suggestion would be simple. Look for another job quickly.

 

[Zigner]

I saw no indication of any prior contract existing.

It may or may not have been a written contract, but there was definitely a contract.

 

[adjusterjack]

It may or may not have been a written contract, but there was definitely a contract.

Fair enough. I wrote that before reading the case decision. According to the decision it could have even been an "implied" contract based on prior method of commission payment.