The Legislature finds and declares that independent wholesale sales representatives are a key ingredient to the California economy. The Legislature further finds and declares the wholesale sales representatives spend many hours developing their territory in order to properly market their products, and therefore should be provided unique protection from unjust termination of the territorial market areas. Therefore, it is the intent of the Legislature, in enacting this act to provide security and clarify the contractual relations between manufacturers and their nonemployee sales representatives.
Obligations Arising From Particular TransactionsIndependent Wholesale Sales Representatives
Section § 1738.10
This law is all about protecting independent wholesale sales representatives in California. It recognizes their important role in the economy and the effort they put into developing their sales territories. The law aims to offer them protection from being unfairly terminated by manufacturers, ensuring that their contractual relationships are secure and clear.
independent wholesale sales representatives California economy territorial market areas
Section § 1738.11
This section simply states the official name of the law, which is the Independent Wholesale Sales Representatives Contractual Relations Act of 1990.
This chapter shall be known and cited as the Independent Wholesale Sales Representatives Contractual Relations Act of 1990.
Independent Wholesale Sales Representatives Contractual Relations Act 1990
Section § 1738.12
This section defines key terms related to businesses and sales representatives. A 'manufacturer' is any group making products for resale in California. A 'jobber' buys products to resell to consumers in California. A 'distributor' sells products from their stock to resell in the state. A 'chargeback' is a deduction from a sales rep's commission not required by law. Lastly, a 'wholesale sales representative' is someone who earns commissions by securing wholesale orders but doesn’t make direct sales to consumers or buy exclusively for their own resale.
For purposes of this chapter the following terms have the following meaning:
(a)CA Civil Law Code § 1738.12(a) “Manufacturer” means any organization engaged in the business of producing, assembling, mining, weaving, importing or by any other method of fabrication, a product tangible or intangible, intended for resale to, or use by the consumers of this state.
(b)CA Civil Law Code § 1738.12(b) “Jobber” means any business organization engaged in the business of purchasing products intended for resale and invoicing to purchasers for resale to, or use by, the consumers of this state.
(c)CA Civil Law Code § 1738.12(c) “Distributor” means any business organization engaged in offering for sale products which are shipped from its inventory, or from goods in transit to its inventory, to purchasers and intended for resale to, or use by the consumers of this state.
(d)CA Civil Law Code § 1738.12(d) “Chargeback” means any deduction taken against the commissions earned by the sales representative which are not required by state or federal law.
(e)CA Civil Law Code § 1738.12(e) “Wholesale sales representative” means any person who contracts with a manufacturer, jobber, or distributor for the purpose of soliciting wholesale orders, is compensated, in whole or part, by commission, but shall not include one who places orders or purchases exclusively for his own account for resale and shall not include one who sells or takes orders for the direct sale of products to the ultimate
consumer.
manufacturer jobber distributor
Section § 1738.13
This law requires that manufacturers, jobbers, or distributors doing business in California and using wholesale sales representatives must have a written contract with these sales reps if they are paid through commissions. The contract should detail how commissions are calculated, when they are paid, the sales representative's territory, any exceptions to these territories, and any potential deductions from commissions. Both parties should have signed copies of the contract. Along with commission payments, the sales rep should receive a detailed account of orders, including customer names, invoice numbers, commission rates, and information on any deductions. The law also makes it clear that any part of the contract waiving these rights is invalid and against public policy.
(a)CA Civil Law Code § 1738.13(a) Whenever a manufacturer, jobber, or distributor is engaged in business within this state and uses the services of a wholesale sales representative, who is not an employee of the manufacturer, jobber, or distributor, to solicit wholesale orders at least partially within this state, and the contemplated method of payment involves commissions, the manufacturer, jobber, or distributor shall enter into a written contract with the sales representative.
(b)CA Civil Law Code § 1738.13(b) The written contract shall include all of the following:
(1)CA Civil Law Code § 1738.13(b)(1) The rate and method by which the commission is computed.
(2)CA Civil Law Code § 1738.13(b)(2) The time when commissions will be paid.
(3)CA Civil Law Code § 1738.13(b)(3) The territory assigned to the sales representative.
(4)CA Civil Law Code § 1738.13(b)(4) All exceptions to the assigned territory and customers therein.
(5)CA Civil Law Code § 1738.13(b)(5) What chargebacks will be made against the commissions, if any.
(c)CA Civil Law Code § 1738.13(c) The sales representative and the manufacturer, jobber, or distributor shall each be provided with a signed copy of the written contract and the sales representative shall sign a receipt acknowledging receipt of the signed contract.
(d)CA Civil Law Code § 1738.13(d) The sales representative shall be provided with the following written information
and documentation with payment of the commission:
(1)CA Civil Law Code § 1738.13(d)(1) An accounting of the orders for which payment is made, including the customer’s name and invoice number.
(2)CA Civil Law Code § 1738.13(d)(2) The rate of commission on each order.
(3)CA Civil Law Code § 1738.13(d)(3) Information relating to any chargebacks included in the accounting.
(e)CA Civil Law Code § 1738.13(e) No contract shall contain any provision which waives any rights established pursuant to this chapter. Any such waiver is deemed contrary to public policy and void.
wholesale sales representative written contract commission calculation
Section § 1738.14
If a manufacturer, wholesaler, or distributor from outside California makes a contract that falls under certain rules, California will consider them as doing business there, meaning they can be subject to legal actions in California courts.
A manufacturer, jobber, or distributor who is not a resident of this state, and who enters into a contract regulated by this chapter is deemed to be doing business in this state for purposes of personal jurisdiction.
non-resident businesses personal jurisdiction doing business in California
Section § 1738.15
If a manufacturer, jobber, or distributor deliberately doesn't follow the rules by either not having a written contract or not paying commissions stated in the contract, they can be sued by the sales rep for triple the amount of damages proven in court.
A manufacturer, jobber, or distributor who willfully fails to enter into a written contract as required by this chapter or willfully fails to pay commissions as provided in the written contract shall be liable to the sales representative in a civil action for treble the damages proved at trial.
manufacturer liability jobber obligations distributor contract
Section § 1738.16
If a sales representative sues under this chapter and wins, they can recover reasonable attorney’s fees and costs, along with any other winnings.
In a civil action brought by the sales representative pursuant to this chapter, the prevailing party shall be entitled to reasonable attorney’s fees and costs in addition to any other recovery.
sales representative civil action attorney's fees
Section § 1738.17
This law says it doesn't apply to anyone who has a license under Division 9 of the Business and Professions Code, which starts at Section 23000.
This chapter shall not apply to any person licensed pursuant to Division 9 (commencing with Section 23000) of the Business and Professions Code.
Division 9 Business and Professions Code Section 23000
