Referral Sales Contract Law and Legal Definition

Referral sales contract is a dual agreement which consists of an agreement by the consumer to purchase goods or services generally at an inflated price. The second agreement is by the seller to compensate the consumer for each customer or potential customer referred to the seller. This is also termed as referral sales agreement. The problem in a referral sales contract is that the success of the arrangement depends on an inexhaustible supply of customers. The Uniform Consumer Credit Code prohibits the use of referral sales schemes in which the rebate depends on the occurrence of an event after the time the consumer agrees to buy or lease.