Exclusivity Clause
Also called: Exclusive Dealing · Sole Supplier Clause
An exclusivity clause restricts a party from dealing with competitors of the other — for example, requiring a buyer to purchase only from one supplier, or granting a distributor sole rights in a territory. It trades commercial flexibility for commitment.
In more detail
Exclusivity is a genuine commercial bargain, not a one-way concession. A party accepting exclusivity is giving up optionality, and should generally receive something identifiable in return: better pricing, guaranteed volumes, marketing investment, or a protected territory.
The most important defensive terms are duration and performance conditions. Open-ended exclusivity with no minimum performance obligation on the benefiting party is the structure most likely to be regretted — it locks one side in while requiring nothing of the other.
Scope should be defined precisely: which products, which territories, which customer segments, and whether existing relationships are grandfathered.
Exclusive dealing arrangements can attract competition or antitrust scrutiny in some jurisdictions, particularly where a party has significant market power. The commercial terms and the regulatory position need to be assessed together.
What our lawyers check
- What is given in exchange for the exclusivity
- Duration, and whether there is a right to exit for non-performance
- Minimum volume or performance obligations on the benefiting party
- Precise scope — products, territory, channels, and carve-outs
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
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