This Referral Agreement template is a ready-to-use legal form to record the terms under which one party refers potential customers, clients, or leads to another party in exchange for a referral fee or commission. It sets clear expectations for referral identification, tracking, compensation, payment timing, and responsibilities. Use this template when an individual, affiliate, consultant, or business (the "Referrer") will introduce prospective customers to a company (the "Company") and both parties wish to memorialize compensation, confidentiality, compliance, and termination terms. Key clauses include Definitions, Referral Obligations, Referral Fees and Payment Terms, Confidentiality, Term and Termination, Independent Contractor status, Indemnification, Limitation of Liability, and Governing Law. Customize the placeholders (e.g., [REFERRER NAME], [COMPANY NAME], [REFERRAL FEE PERCENTAGE], [STATE]) to fit your arrangement.
Referral Agreement
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What is a Referral Agreement?
A referral agreement is a written contract where one party agrees to send potential customers or leads to another party in exchange for a fee or commission. Its legal purpose is to define who qualifies as a referral, how fees are calculated and paid, and the parties’ rights and obligations. Businesses, affiliates, independent sales agents, and professional partners commonly use it to formalize lead-generation arrangements.
Key Components
A legally effective Referral Agreement must include the following elements:
- Parties and clear definitions (defining “referral,” “lead,” and other key terms)
- Scope of referrals and qualification criteria (what counts as a payable referral)
- Compensation and payment terms (fee or commission rate, payment triggers, timing, and method)
- Tracking, reporting, and proof of referrals (how referrals are documented and disputes about attribution resolved)
- Term, termination, and post-termination obligations (contract length, notice, and survival of key clauses)
- Confidentiality, data protection, and compliance (handling personal data, privacy and regulatory restrictions)
- Representations, warranties, indemnification, and governing law/dispute resolution
When to Use This Template
- A SaaS company wants to reward third‑party affiliates or influencers for signing up new paying customers and needs a clear commission structure.
- A small business asks existing clients or vendors to introduce new customers and wants written terms for payment and lead qualification.
- A startup hires independent sales agents who will source enterprise leads and requires rules for attribution, payments, and territorial limits.
- A professional services firm refers clients to a vetted partner and needs to document confidentiality, compliance, and fee sharing.
- A marketplace wants to formalize referral partnerships with local resellers and recordkeeping procedures for disputed commissions.
Frequently Asked Questions
What is a referral agreement?
A referral agreement is a contract describing how one party will refer potential customers to another and what compensation they will receive. It sets the qualifications for referrals, payment mechanics, and other obligations so both sides understand expectations.
How much should I pay for a referral fee?
Referral fees vary by industry and deal type—common structures include flat fees or a percentage of the first sale (often 5–20%) or recurring commissions for subscription business. Choose a rate that reflects the value of a qualified lead, sales cycle length, and competitive norms, and record it clearly in the agreement.
Do referral agreements need to be in writing?
While some informal referral arrangements may work orally, a written agreement is strongly recommended because it documents key terms and makes enforcement far easier. A written contract reduces misunderstandings about qualification, timing, and payment and preserves evidence if disputes arise.
Can I terminate a referral agreement early?
Yes, you can terminate early if the agreement includes a termination clause specifying notice requirements and conditions for exit. Well-drafted agreements also address how outstanding or pending commissions are handled and which provisions survive termination, like confidentiality and indemnities.
Legal Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. Consult a licensed attorney before signing any legal document.