Life of the Part Clause Law and Legal Definition
The “life of the part” provisions are commonly used in agency contracts/agreements. This clause is inserted to protect the earned commissions of sales representatives. Sales representatives commonly insist on ‘life of the part’ provisions in agency contracts because the sales representative must invest a great deal of time, effort, and money in securing an initial sale and after an initial sale is made, the buyer may continue to use the part in the manufacture of its automobiles for many years. Many of the manufactured parts are functional items, such as plastic knobs, switches, and latches, and the buyer may use the same part for many model years. Sales will continue for repair and replacement parts even after the buyer discontinues use of such part. The independent sales representatives insert “life of the part” provisions in their agreements, requiring that commissions continue to be paid despite termination, in order to guard against opportunistic termination, where the manufacturer terminates the sales representative to avoid having to pay commission on future sales.[ Clark Bros. Sales Co. v. Dana Corp., 77 F. Supp. 2d 837, 841 ( E.D. Mich. 1999)].
The use of “life of the part” is common industry practice especially in the automobile industry. Majority of the states in the United States have enacted statutes to protect earned commissions for sales representatives, with slight variations.