34-44-102. Definitions.
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Effective 5/14/2019
34-44-102. Definitions.
As used in this chapter:
(1)"Business relationship" means an agreement that governs the relationship of principal and sales representative.
(2)"Commission" means:
(a)compensation:
(i)that accrues to a sales representative;
(ii)for payment by a principal; and
(iii)at a rate expressed as a percentage of the dollar amount of sales, orders, or profits; or
(b)any other method of compensation agreed to between a sales representative and a principal including:
(i)fees for services; and
(ii)a retainer.
(a)"Direct sales company" means a person that:
(i)sells, distributes, or supplies for consideration a good or service through participants:
(A)at different levels of distribution; or
(B)in accordance with a formula for compensating participants in whole or in part based on:
(I)the sale of a good or service; and
(II)the recruitment of or the performance or action of another participant; and
(A)permits participants to recruit other participants to sell, distribute, or supply for consideration the person's good or service; or
(B)provides for commission, cross-commissions, override commissions, bonuses, refunds, dividends, or other consideration that is or may be paid as a result of:
(I)the sale of a good or service; or
(II)the recruitment of or the performance or action of another participant.
(b)As used in this Subsection
(3), "participant" means an independent agent, contractor, or distributor.
(4)"Principal" means a person who:
(a)engages in any of the following activities with regard to a product or service:
(i)manufactures;
(ii)produces;
(iii)imports;
(iv)sells; or
(v)distributes;
(b)establishes a business relationship with a sales representative to solicit orders for a product or a service described in Subsection (4)(a) ; and
(c)agrees to compensate a sales representative, in whole or in part, by commission.
(a)Except as provided in Subsection (5)(b) , "sales representative" means a person who enters into a business relationship with a principal:
(i)to solicit orders for a product or a service described in Subsection (4)(a) ; and
(ii)under which the person is compensated, in whole or in part, by commission.
(b)"Sales representative" does not include:
(i)an employee of a principal;
(ii)a person licensed under Title 31A, Insurance Code ;
(iii)a person licensed under Title 41, Chapter 3, Part 2, Licensing ;
(iv)a person licensed under Title 61, Chapter 2f, Real Estate Licensing and Practices Act ;
(v)a person who provides a product or service under a business relationship with a principal that is incident to the purchase or sale of real property;
(vi)a person who places an order or purchases a product or service for that person's own account for resale; or
(vii)an independent agent, contractor, or distributor through whom a direct sales company supplies for consideration a good or service.
(6)"Terminates" or "termination" means the end of a business relationship between a sales representative and a principal, whether by:
(a)agreement;
(b)expiration of a time period; or
(c)exercise of a right of termination by either the principal or the sales representative.
Amended by Chapter 438 , 2019 General Session