By Lex Nova Lawyer × Thoolie
You fired your agent six months ago… but your royalty statement still shows their 10% commission. Welcome to the world of sunset clauses — the contract term that can keep former managers, agents, or producers cashing checks long after you’ve parted ways.
This isn’t rare. It’s industry standard.
But that doesn’t mean you have to sign the worst version of it.
This guide breaks down what a sunset clause actually does, the red flags that should make you think twice, and the smarter alternatives you can negotiate before signing.
What Is a Sunset Clause?
A sunset clause lets your former representative keep earning commission on deals they helped secure — even after your relationship ends.
The good version:
- Time-limited
- Only applies to deals they actually worked on
- Designed to fairly compensate them for their contributions
The bad version:
- Goes on for years (or forever)
- Includes deals they didn’t negotiate
- Extends to renewals or unrelated income
- Has no clear end date
If your contract doesn’t define it clearly, you could be paying for work your rep never did — indefinitely.
🚩 Red Flag Sunset Language to Watch Out For
| Clause | Why It’s a Problem |
|---|---|
| “10% of all earnings in perpetuity” | No end date. You’re paying them forever. |
| “Commission on all income from prior clients, contacts, or introductions” | Broad enough to include deals they never closed. |
| “Sunset applies to renewals and extensions” | Could keep paying them years later, even after firing them. |
| “Continues unless terminated in writing” | You may still owe them money just because no one followed up. |
✅ Smarter Alternatives to Negotiate
| ❌ Don’t Use This | ✅ Use This Instead |
|---|---|
| “Commission in perpetuity” | “Commission for 12 months post-termination only” |
| “All income from prior introductions” | “Only applies to deals executed during representation” |
| “No defined sunset period” | “Tiered payout: 100% in year 1, 50% in year 2, 25% in year 3” |
| “Sunset applies to renewals” | “Sunset applies to original deal term only, not renewals” |
Sample Sunset Clause (Fair Version)
“Representative shall continue to receive commission on engagements substantially negotiated during the Term, for a period of twelve (12) months following termination. This clause shall not apply to renewals, extensions, or new engagements beyond that period.”
🤔 Questions to Ask Before You Sign
- How long does the sunset period last?
- Does it apply only to deals they negotiated, or to everything?
- Is it tiered or capped over time?
- What happens if the deal renews — do they still get paid?
- Is the sunset clause clearly and narrowly defined in writing?
🧠 Final Tip from Lex Nova Lawyer
Sunset clauses are normal. They protect the rep’s right to be paid for deals they actually built.
But they should never be forever — and they should never cover income unrelated to their work.
Time it. Define it. Cap it.
🔐 Want a better agreement?
Thoolie’s Talent Contract Templates include built-in sunset clause options that are fair for both creators and reps. Start with lawyer-drafted defaults, then customize for your deal.
