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Referral agreement

Referral agreement

Noun

A referral agreement is a legal contract that defines a partnership between a service provider and a referral partner that earns commission on sales. The contract sets out the terms of a partnership wherein one party is referring qualified leads or customers to the other partner in exchange for rewards or compensation.

Referrals are an effective method of increasing lead acquisition and sales, and a referral partnership is mutually beneficial as one partner sees increased sales and the other earns a cut for their leads. These partnerships are governed by referral agreements to ensure each party is clear on the terms of the partnership, what will be done in the event of a dispute, and how the partnership can be terminated if desired.

Typical inclusions in a referral agreement include (but are not limited to) terms, audit rights, intellectual property, confidentiality, and dispute resolution.

Example:

It took Lucy's lawyers a while to go through her referral agreement with Lookster, but once it was signed, she was excited to celebrate (and start earning commission on her leads).

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