Procuring Cause Doctrine Law and Legal Definition
An employee of an employer is entitled to commissions he/she procures from a ready, willing and able purchaser. The procuring cause doctrine is a default rule for interpreting a contract that is silent regarding the intent of the parties regarding post-termination commissions. The default rule is that such commissions must be paid irrespective of whether the employee is employed at the time the commission is to be paid. The procuring cause doctrine is derived from the basic principle of good faith and fair dealing that is implied in a sales commission contract. [Reed v. Kurdziel, 352 Mich. 287, 294-295 (Mich. 1958)]. Generally, unless an agreement between the employee and employer provides otherwise, final consummation of the sale is not required. [Fryer v. Conant, 159 Wis. 2d 739, 744 (Ct. App. 1990)].
There are state specific laws on the application of the doctrine. For example, in Michigan, a sales representative is entitled to recover his commission whether or not he has personally concluded and completed the sale. It is sufficient if his efforts were the procuring cause of the sale. The “procuring cause” doctrine is applied depending on a determination of the intentions of the parties to the agency relation. Id. The relationship between agent or broker and principal being a contractual one, it is immediately apparent that whether an agent or broker is entitled to commissions on sales made or consummated by his principal or by another agent depends upon the intention of the parties and the interpretation of the contract of employment. In addition, all the circumstances must also be considered. [[Kingsley Assoc., Inc. v. Del-Met, Inc., 918 F.2d 1277, 1282 (6th Cir. Mich. 1990)]
Further, Michigan’s procuring cause doctrine and Mich. Comp. Laws § 600.2961(4) confer upon a sales representative the right to receive payment of commissions coming come due after the termination date. [Merryman Sales v. Mid-West Fabricating Co., 1999 U.S. Dist. LEXIS 618, 9]