Broker Agreement Template (US)

Broker, agent or finder — the label decides the law

In the US these words are used loosely, but they describe different relationships with different consequences. A finder introduces and steps back. A broker introduces, may assist negotiations, and is paid on completion. An agent acts on the principal's behalf, often with authority to bind it, and owes stronger duties.

This matters more outside the US than inside it, and anyone doing cross-border introductions should know why. In the European Union, a self-employed intermediary with continuing authority to negotiate the sale or purchase of goods in the principal's name is a commercial agent, and statutory protection — including compensation or indemnity when the relationship ends — follows automatically and cannot be contracted away. An introducer paid per closed deal, acting in its own name, is usually outside that regime. Germany makes the distinction structural: a Handelsmakler under the commercial code has no continuing engagement and builds its own client base, unlike a Handelsvertreter. If your broker will introduce business in Europe, the classification is the first question to answer, and the localized versions of this page set out each country's test.

This template is drafted as a brokerage, not an agency: the broker has no authority to bind, acts in its own name, and is paid on results. It says so expressly, because that statement is the first thing anyone reviewing the relationship will look for.

The commission trigger is the whole contract

Three questions decide every commission dispute. What counts as an introduction — a name, a meeting, or a qualified conversation? When is commission earned — on signature, on delivery, or on the principal being paid? And for how long after the introduction does the broker keep earning?

The source gets the second one right by tying commission to the principal actually receiving payment, which protects the paying party from commission on bad debt. This template keeps that and fixes the other two: an introduction has to be registered in writing and acknowledged, so there is a record of who brought whom, and the tail period is a defined number of months with a stated basis rather than a blank. It also deals with the case everybody forgets — two brokers claiming the same introduction — by giving priority to the first registered introduction.

For repeat business, the template asks whether commission is payable on the first transaction only or on the client's subsequent orders too, and if so for how long. That single question is the most common cause of a relationship souring two years in.

Licensing and the securities trap

Brokerage is licensed activity across large parts of the US economy. Real estate, insurance, mortgage origination, freight brokerage and securities all have licensing regimes, most of them state-level, and an unlicensed intermediary may be unable to sue for its commission at all.

The securities point deserves its own paragraph because it catches ordinary businesses. Section 15(a)(1) of the Securities Exchange Act prohibits effecting transactions in securities without registration, and regulators treat transaction-based compensation as a near-conclusive indicator of brokerage activity. Paying a finder a percentage for introducing an investor therefore creates exposure both ways: for the finder, for acting as an unregistered broker, and for the company, which can face liability for causing or aiding the violation and may hand investors a rescission argument. FINRA's own rules restrict payments by member firms to unregistered persons.

The template's answer is not to solve that problem — it cannot be solved by drafting — but to keep it out of the contract. The scope clause excludes securities transactions and capital raising unless the broker is registered, and the licensing clause requires the broker to hold and maintain every licence its activity needs and to tell the principal immediately if one lapses.

Anti-bribery belongs in every introducer agreement

Success fees paid to intermediaries who open doors are the single most scrutinised payment pattern in anti-corruption enforcement, because they are the natural vehicle for a bribe. A company that engages introducers in unfamiliar markets without an anti-bribery clause, and without any diligence on who the introducer actually is, is carrying a risk it has not priced.

This template includes an anti-bribery and anti-corruption clause, a representation that the broker is not a government official and has no undisclosed relationship with one, a duty to disclose conflicts before an introduction rather than after, and immediate termination with forfeiture of unpaid commission for a breach. It also requires the broker to keep records of what it did to earn the commission, which is both good practice and the evidence a company needs if it is ever asked.

The clauses the source left blank

Three blanks in the source template are effectively unusable as drafted: the notice period for termination for convenience, the tail period, and the cure period, which is written as "a reasonable period". This template gives all three real defaults you can change, because a contract that requires a negotiation to interpret is not finished.

It also adds what an introducer contract genuinely needs and the source omitted: a data-protection clause, because passing contact details is the whole business; the tax treatment of commission, including information reporting and the position for a non-US broker; an insurance requirement where the broker will hold client information; and a clean exclusivity option, since "non-exclusive" is a default rather than a decision.

Clause-by-clause guide

Appointment and status

Appoints the broker as an introducer in its own name, with no authority to bind, and says whether the appointment is exclusive.

Scope and exclusions

What the broker will introduce, and the express exclusion of securities and capital-raising activity unless the broker is registered.

Registering an introduction

Introductions must be notified in writing and acknowledged, creating the record that decides later commission claims.

Commission and when it is earned

Rate, the transactions it applies to, and the trigger — normally on the principal receiving payment, not on signature.

Repeat business

Whether commission applies to the introduced client's later orders, and for how long.

Tail period

A defined number of months after termination during which a transaction with a registered introduction still earns commission.

Competing claims

Gives priority to the first registered introduction, so two brokers cannot both be right.

Licensing and regulatory status

The broker holds every licence its activity requires, maintains it, and reports any lapse immediately.

Anti-bribery and conflicts

No improper payments, no undisclosed public-official connection, conflicts disclosed before the introduction, records kept.

Non-circumvention

Stops the principal going around the broker to avoid commission on a registered introduction.

Confidentiality and data protection

Covers both the principal's commercial information and the personal data inherent in passing contacts.

Tax and reporting

Commission is gross of the broker's own taxes, with information reporting and the non-US broker position covered.

Term and termination

A real notice period, termination for material breach with a stated cure period, and immediate termination for licensing or bribery breaches.

Liability

A cap tied to commission paid, with the usual carve-outs for the indemnities and for fraud.

US points to check

• Do not pay success fees for introducing securities investors to an unregistered person

  Section 15(a)(1) prohibits effecting securities transactions without registration, and transaction-based compensation is treated as a strong indicator of brokerage. Exposure runs to the paying company as well as the finder, and can give investors a rescission argument.

  SEC — proposed conditional exemption for finders (background on § 15(a))

• Check FINRA restrictions if a member firm is involved

  FINRA Rule 2040 restricts payments by member firms and their associated persons to unregistered persons for activity requiring registration.

  FINRA Rule 2040

• Confirm state licensing for the activity

  Real estate, insurance, mortgage and freight brokerage licensing is largely state-level, and an unlicensed broker may be unable to recover its commission. Verify the licence for each state where the broker will operate, not just where it is based.

• Include anti-bribery terms and do some diligence

  Success fees to intermediaries are a recognised corruption risk pattern. Take a representation that the broker is not a government official and has no undisclosed connection to one, require conflicts to be disclosed before an introduction, and keep a record of the services actually performed.

• Handle information reporting on commission

  Commission paid to a US independent contractor is generally reportable, and payments to a non-US person raise withholding and documentation questions. Collect the right tax form before the first payment rather than at year end.

• Deal with the personal data in an introduction

  Introducing a business means passing individuals' contact details. Say who may hold them, for what purpose, and what happens on termination — several state privacy laws now bite on this.

• Make the tail period explicit

  A tail with no stated length is the most common commission dispute of all. Set a number of months and tie it to registered introductions, so both sides can calculate the exposure.

How to complete this agreement

1. Set the appointment. Enter the parties, whether the appointment is exclusive, and the territory or market the broker will work.
2. Define the scope. Describe the business to be introduced and confirm the securities exclusion applies unless the broker is registered.
3. Set the commission mechanics. Enter the rate, what it is calculated on, the payment trigger and the payment days after the trigger.
4. Decide repeat business and the tail. Choose whether later orders from an introduced client earn commission, and for how long, and set the tail period in months.
5. Complete licensing and compliance. List the licences the broker holds, and keep the anti-bribery and conflicts clauses in place.
6. Set term, notice and cure. Enter the term, the notice period for termination for convenience, and the cure period for a material breach.
7. Review, download and sign. Check that the commission trigger and tail say exactly what you intended, then download and sign.

Frequently asked questions

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