A recent Fifth Circuit decision in Sims Agency, LLC v. GEICO underscores a hard truth for commission-based professionals.
Courts will enforce the plain text of your contract, and nothing more.
This Fifth Circuit decision reminds insurance agents and any commission-based professionals that post-termination compensation must be spelled out in writing. Sims Agency, a captive GEICO agent, claimed nearly $2 million in renewal commissions after its contract ended. The court rejected the claim, holding that under Maryland law, an agent’s right to renewal commissions exists only if the contract expressly provides it. Because the agreement lacked such language and even included a “final commission check” clause, the court found Sims had no right to future payments. The court also dismissed an unjust enrichment claim, ruling that express contracts bar such “backdoor” remedies.
This case illustrates how courts enforce the plain text of business contracts, especially when it comes to compensation rights. Even a broadly worded “survival clause” or the parties’ expectations can’t create obligations that the contract itself omits.
If a business depends on agents, affiliates, or partners, make sure the agreements clearly define what happens when the relationship ends.
This could include whether commissions, royalties, or bonuses continue. For agents and brokers, the takeaway is equally clear: once the contract ends, so may the right to future income unless the agreement says otherwise.
This post is for informational purposes only and does not constitute legal advice. If you have questions about your specific situation, you should contact a lawyer for assistance. Nothing herein is intended to create any attorney-client relationship between you and DLM LAW.
