As Reported by the Senate Economic Development, 1
Technology and Aerospace Committee 2
123rd General Assembly 5
Regular Session S. B. No. 18 6
1999-2000 7
SENATORS DRAKE-PRENTISS-ARMBRUSTER-SPADA 9
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A B I L L
To amend section 1335.11 of the Revised Code to 13
regulate contracts for the solicitation by a 14
sales representative of product or service orders
whether or not the place of business of the 15
manufacturer or distributor of the product is in 16
Ohio, to define "termination" of a contract, to 18
specify that exemplary damages may be awarded for
a failure to pay on a timely basis commissions 19
due that constitutes willful, wanton, or reckless 20
misconduct or bad faith, and to create a 21
presumption when bad faith exists.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 23
Section 1. That section 1335.11 of the Revised Code be 25
amended to read as follows: 26
Sec. 1335.11. (A) As used in this section: 35
(1) "Commission" means compensation accruing to a person 37
for payment by another person, the rate of which is expressed as 38
a percentage of the dollar amount of orders, sales, or profits. 39
(2) "Principal" means any A person who does not have a 41
permanent or fixed place of business in this state and who does 42
all of the following: 43
(a) Engages in EITHER OF the FOLLOWING: 45
(i) THE business of manufacturing, producing, importing, 48
or distributing one or more products for sale to customers who 49
purchase products for resale; OR FOR CONSUMPTION OR UTILIZATION 50
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IN THE MANUFACTURING PROCESS;
(ii) THE BUSINESS OF PROVIDING SERVICES TO CUSTOMERS. 53
(b) Utilizes one or more sales representatives to solicit 55
wholesale orders for those products OR ORDERS FOR THOSE SERVICES; 57
(c) Compensates the sales representatives in whole or in 59
part by commission. 60
(3) "Sales representative" means a person who contracts 62
with a principal to solicit wholesale orders for a product within 64
this state OR ORDERS FOR THE PROVISION OF SERVICES and who is 65
compensated, in whole or in part, by commission, but does not 67
include a person who places orders for or purchases the product 68
for his THAT PERSON'S own account for resale OR PLACES ORDERS FOR 69
THE PROVISION OF OR PURCHASES SERVICES FOR THAT PERSON'S OWN 70
ACCOUNT, a person who is an employee of a principal, or a person 71
who sells the product to the ultimate consumer CONTRACTS WITH A 72
PRINCIPAL TO SOLICIT WITHIN THIS STATE ORDERS FOR A PRODUCT OR 73
ORDERS FOR THE PERFORMANCE OF SERVICES AND WHO IS NOT 74
COMPENSATED, IN WHOLE OR IN PART, BY COMMISSION. 75
(4) "TERMINATION" MEANS THE END OF THE PERFORMANCE OF 76
SERVICES BY A SALES REPRESENTATIVE FOR A PRINCIPAL, INCLUDING 77
DISCHARGE OF THE SALES REPRESENTATIVE BY THE PRINCIPAL, 78
RESIGNATION OF THE SALES REPRESENTATIVE, OR EXPIRATION OF THE 79
CONTRACT BETWEEN THE SALES REPRESENTATIVE AND THE PRINCIPAL. 80
(B) For purposes of this section, the time at which a 82
commission is due to a sales representative shall be determined 83
in the following manner: 84
(1) If the contract between the principal and the sales 86
representative is in writing and its terms unambiguously and 87
clearly specify when the commission is due, the terms of the 88
contract shall control the determination;. 89
(2) If the contract between the principal and the sales 91
representative is not in writing, or if the contract between them 92
is in writing but its terms do not specify when the commission is 93
due or its terms are ambiguous or unclear, the past practice used 94
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by the principal and the sales representative shall control the 95
determination;. 96
(3) If neither division (B)(1) nor (B)(2) of this section 98
can be used to clearly ascertain when a commission is due, the 99
custom and usage prevalent in this state for the principal's and 100
sales representative's industry shall control the determination. 101
(C) If UPON THE TERMINATION OF a contract between a 103
principal and a sales representative for the solicitation of 105
wholesale orders is terminated FOR A PRODUCT OR ORDERS FOR 106
SERVICES, the principal shall pay the sales representative all 107
commissions due him THE SALES REPRESENTATIVE at the time of the 108
termination within thirteen THIRTY days of the termination, and 110
shall pay the sales representative all commissions that become 112
due after the termination within thirteen days of the date on 113
which the commissions become due.
(D) A principal who fails to comply with division (C) of 115
this section or with any contractual provision concerning timely 116
payment of commissions due upon termination of a contract with a 117
sales representative, is liable in a civil action for exemplary 118
damages in an amount not to exceed three times the amount of the 119
commissions owed to the sales representative IF THE SALES 120
REPRESENTATIVE PROVES THAT THE PRINCIPAL'S FAILURE TO COMPLY WITH 121
DIVISION (C) OF THIS SECTION OR THE CONTRACTUAL PROVISION 122
CONSTITUTED WILLFUL, WANTON, OR RECKLESS MISCONDUCT OR BAD FAITH. 123
IF A PRINCIPAL RECEIVES A WRITTEN DEMAND FOR PAYMENT OF THE 124
COMMISSIONS OWED TO A SALES REPRESENTATIVE THAT WAS SENT BY
CERTIFIED MAIL, THE FAILURE OF THE PRINCIPAL TO RESPOND TO THE 125
WRITTEN DEMAND IN WRITING WITHIN TWENTY DAYS AFTER THE PRINCIPAL 127
RECEIVES THE WRITTEN DEMAND SHALL RAISE A PRESUMPTION THAT THE 128
PRINCIPAL ACTED WILLFULLY AND IN BAD FAITH. The prevailing party 130
in an action brought under this section is entitled to reasonable 131
attorney's fees and court costs.
(E) Division (A)(1) of section 2307.382 of the Revised 133
Code applies to a principal who is not a resident of this state 134
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and who enters into an agreement with a sales representative for 135
the solicitation of orders in this state, to authorize the 136
exercise by a court of personal jurisdiction over the principal. 137
(F) Any provision in any contract between a sales 139
representative and principal purporting to waive IS VOID IF IT 140
PURPORTS TO DO ANY OF THE FOLLOWING: 141
(1) WAIVE any of the provisions of this section is void; 144
(2) MAKE THE CONTRACT SUBJECT TO THE LAWS OF ANOTHER 146
STATE;
(3) LIMIT THE RIGHT OF THE SALES REPRESENTATIVE TO 148
INITIATE LITIGATION OR ALTERNATIVE DISPUTE RESOLUTION IN THIS 149
STATE.
(G) Nothing in this section invalidates or restricts any 151
other or additional right or remedy available to a sales 152
representative, or precludes a sales representative from seeking 153
to recover in one action on all claims against a principal. 154
Section 2. That existing section 1335.11 of the Revised 156
Code is hereby repealed. 157