Sales Representative Is Entitled to Commissions on Sales He Did Not Procure If the Contract So Provides
AA SALES v. CONI-SEAL (December 9, 2008)
Gerald Saltzman, owner and sole employee of AA Sales, and Coni-Seal started working together in the early 1980s. Coni-Seal manufactured automotive parts. Saltzman was a sales representative. Early successes led to a written agreement in 1987. The contract provided AA Sales with a 6% commission on sales to approved accounts and with 5 years of post-termination commissions on accounts previously sold by AA Sales. AA and Coni-Seal later agreed to negotiate commissions on an account-by-account basis. In 1994, Coni-Seal approved AA to solicit AutoZone, a large retailer of automotive parts. Shortly thereafter, their relationship began to sour. In 1995, Coni-Seal reassigned several accounts away from AA. In return for releasing the accounts, AA agreed to a monthly fee and a 2% commission on sales to the accounts it released. Coni-Seal authorized a second sales representative for AutoZone in 2003. Coni-Seal began selling to AutoZone in 2004. It paid no commissions to AA on these sales. AA filed suit for breach of contract and violation of the Illinois Sales Representative Act (“ISRA”). The district court granted summary judgment to Coni-Seal. AA appeals.
In their opinion, Judges Cudahy, Flaum and Rovner affirmed in part and reversed in part. The Court agreed with the district court that AA was not responsible for the AutoZone sales but disagreed that that ended the inquiry. The issue for the Court was whether the parties’ contract entitled it to commissions. The Court determined that the contract required Coni-Seal to pay a commission: a) during the life of the contract on all sales to approved accounts, whether AA was responsible for the sale or not, and b) after termination of the contract, only on sales to accounts for which AA was responsible for sales during the life of the contract. The Court proceeded to address the issue of whether Coni-Seal’s sales to AutoZone were “sales to approved accounts.” The parties’ versions of the development of the AutoZone account differed considerably. The Court reversed and remanded for trial.
With respect to AA’s claims on the 1995 oral contract, the Court held that it was not a new contract, but a modification of the termination provisions of the 1987 contract. Since it did not include a term of years to apply to the new post-termination commissions, the Court applied the five year term from the 1987 contract. Since Coni-Seal had already paid the commissions for over ten years, the Court affirmed the district court’s judgment on the 1995 contract.
