For salesmen and manufacturers representatives who are owed commissions, a recent decision of the Court of Appeals for the Sixth Circuit in a breach of contract case for commissions owed is not encouraging. The analysis and application of Tennessee breach of contract law to the facts of the case by the majority of the three judge panel was D to D- work (to the losing plaintiff, I am sure it was F work) . The dissenting judge’s opinion, which was justifiably quite sharp, is the only bright spot for those seeking unpaid commissions (and for lawyers who like to see the law applied correctly).
In the case, Maverick Group Marketing, Inc. v. Worx Environmental Products, Ltd., the plaintiff sales company worked for years on behalf of the defendant to have Wal-Mart buy the defendant’s product. Then, the defendant terminated its contract with plaintiff. The defendant then received its first order from Wal-Mart three weeks after terminating its contract with the plaintiff.
Before terminating the plaintiff’s contract, the defendant had supplied Wal-Mart a supplier agreement, Wal-Mart had tested the product, and Wal-Mart and the defendant had agreed on the price for the product. The only thing that had not happened was that Wal-Mart had not placed an order.
The contract between the plaintiff and the defendant provided that, if the agreement between them was terminated, then the plaintiff would still receive commissions on “orders solicited prior to the effective date of termination.” The two judge majority reasoned that, because Wal-Mart had not placed an order, no orders had been solicited and, therefore, the plaintiff was not entitled to any sales commissions.