As Passed by the Senate 1
123rd General Assembly 4
Regular Session S. B. No. 18 5
1999-2000 6
SENATORS DRAKE-PRENTISS-ARMBRUSTER-SPADA-RAY 8
_________________________________________________________________ 10
A B I L L
To amend section 1335.11 of the Revised Code to 12
regulate contracts for the solicitation by a 13
sales representative of product or service orders
whether or not the place of business of the 14
manufacturer or distributor of the product is in 15
Ohio, to define "termination" of a contract, to 17
specify that exemplary damages may be awarded for
a failure to pay on a timely basis commissions 18
due that constitutes willful, wanton, or reckless 19
misconduct or bad faith, and to create a 20
presumption when bad faith exists.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 22
Section 1. That section 1335.11 of the Revised Code be 24
amended to read as follows: 25
Sec. 1335.11. (A) As used in this section: 34
(1) "Commission" means compensation accruing to a person 36
for payment by another person, the rate of which is expressed as 37
a percentage of the dollar amount of orders, sales, or profits. 38
(2) "Principal" means any A person who does not have a 40
permanent or fixed place of business in this state and who does 41
all of the following: 42
(a) Engages in EITHER OF the FOLLOWING: 44
(i) THE business of manufacturing, producing, importing, 47
or distributing one or more products for sale to customers who 48
purchase products for resale; OR FOR CONSUMPTION OR UTILIZATION 49
IN THE MANUFACTURING PROCESS;
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(ii) THE BUSINESS OF PROVIDING SERVICES TO CUSTOMERS. 52
(b) Utilizes one or more sales representatives to solicit 54
wholesale orders for those products OR ORDERS FOR THOSE SERVICES; 56
(c) Compensates the sales representatives in whole or in 58
part by commission. 59
(3) "Sales representative" means a person who contracts 61
with a principal to solicit wholesale orders for a product within 63
this state OR ORDERS FOR THE PROVISION OF SERVICES and who is 64
compensated, in whole or in part, by commission, but does not 66
include a person who places orders for or purchases the product 67
for his THAT PERSON'S own account for resale OR PLACES ORDERS FOR 68
THE PROVISION OF OR PURCHASES SERVICES FOR THAT PERSON'S OWN 69
ACCOUNT, a person who is an employee of a principal, or a person 70
who sells the product to the ultimate consumer CONTRACTS WITH A 71
PRINCIPAL TO SOLICIT WITHIN THIS STATE ORDERS FOR A PRODUCT OR 72
ORDERS FOR THE PERFORMANCE OF SERVICES AND WHO IS NOT 73
COMPENSATED, IN WHOLE OR IN PART, BY COMMISSION. 74
(4) "TERMINATION" MEANS THE END OF THE PERFORMANCE OF 75
SERVICES BY A SALES REPRESENTATIVE FOR A PRINCIPAL, INCLUDING 76
DISCHARGE OF THE SALES REPRESENTATIVE BY THE PRINCIPAL, 77
RESIGNATION OF THE SALES REPRESENTATIVE, OR EXPIRATION OF THE 78
CONTRACT BETWEEN THE SALES REPRESENTATIVE AND THE PRINCIPAL. 79
(B) For purposes of this section, the time at which a 81
commission is due to a sales representative shall be determined 82
in the following manner: 83
(1) If the contract between the principal and the sales 85
representative is in writing and its terms unambiguously and 86
clearly specify when the commission is due, the terms of the 87
contract shall control the determination;. 88
(2) If the contract between the principal and the sales 90
representative is not in writing, or if the contract between them 91
is in writing but its terms do not specify when the commission is 92
due or its terms are ambiguous or unclear, the past practice used 93
by the principal and the sales representative shall control the 94
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determination;. 95
(3) If neither division (B)(1) nor (B)(2) of this section 97
can be used to clearly ascertain when a commission is due, the 98
custom and usage prevalent in this state for the principal's and 99
sales representative's industry shall control the determination. 100
(C) If UPON THE TERMINATION OF a contract between a 102
principal and a sales representative for the solicitation of 104
wholesale orders is terminated FOR A PRODUCT OR ORDERS FOR 105
SERVICES, the principal shall pay the sales representative all 106
commissions due him THE SALES REPRESENTATIVE at the time of the 107
termination within thirteen THIRTY days of the termination, and 109
shall pay the sales representative all commissions that become 111
due after the termination within thirteen days of the date on 112
which the commissions become due.
(D) A principal who fails to comply with division (C) of 114
this section or with any contractual provision concerning timely 115
payment of commissions due upon termination of a contract with a 116
sales representative, is liable in a civil action for exemplary 117
damages in an amount not to exceed three times the amount of the 118
commissions owed to the sales representative IF THE SALES 119
REPRESENTATIVE PROVES THAT THE PRINCIPAL'S FAILURE TO COMPLY WITH 120
DIVISION (C) OF THIS SECTION OR THE CONTRACTUAL PROVISION 121
CONSTITUTED WILLFUL, WANTON, OR RECKLESS MISCONDUCT OR BAD FAITH. 122
IF A PRINCIPAL RECEIVES A WRITTEN DEMAND FOR PAYMENT OF THE 123
COMMISSIONS OWED TO A SALES REPRESENTATIVE THAT WAS SENT BY
CERTIFIED MAIL, THE FAILURE OF THE PRINCIPAL TO RESPOND TO THE 124
WRITTEN DEMAND IN WRITING WITHIN TWENTY DAYS AFTER THE PRINCIPAL 126
RECEIVES THE WRITTEN DEMAND SHALL RAISE A PRESUMPTION THAT THE 127
PRINCIPAL ACTED WILLFULLY AND IN BAD FAITH. The prevailing party 129
in an action brought under this section is entitled to reasonable 130
attorney's fees and court costs.
(E) Division (A)(1) of section 2307.382 of the Revised 132
Code applies to a principal who is not a resident of this state 133
and who enters into an agreement with a sales representative for 134
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the solicitation of orders in this state, to authorize the 135
exercise by a court of personal jurisdiction over the principal. 136
(F) Any provision in any contract between a sales 138
representative and principal purporting to waive IS VOID IF IT 139
PURPORTS TO DO ANY OF THE FOLLOWING: 140
(1) WAIVE any of the provisions of this section is void; 143
(2) MAKE THE CONTRACT SUBJECT TO THE LAWS OF ANOTHER 145
STATE;
(3) LIMIT THE RIGHT OF THE SALES REPRESENTATIVE TO 147
INITIATE LITIGATION OR ALTERNATIVE DISPUTE RESOLUTION IN THIS 148
STATE.
(G) Nothing in this section invalidates or restricts any 150
other or additional right or remedy available to a sales 151
representative, or precludes a sales representative from seeking 152
to recover in one action on all claims against a principal. 153
Section 2. That existing section 1335.11 of the Revised 155
Code is hereby repealed. 156