Most Favoured Nation Clause
Also called: MFN Clause · Best Pricing Clause
A most favoured nation clause guarantees a customer that they receive pricing or terms at least as good as those given to any other comparable customer. If the vendor later offers a better deal to someone else, the MFN customer is entitled to match it.
In more detail
MFN clauses are a way for an early or strategically important customer to protect themselves against becoming the "worst deal in the room" as a vendor grows and starts offering more competitive terms to attract new business.
Scope matters enormously — an MFN limited to customers of similar size and contract terms is far more workable for the vendor than one applying to any customer regardless of scale, which can become commercially unmanageable as a vendor's pricing evolves.
Enforcement typically requires the customer to actively invoke the clause and sometimes prove the more favourable terms exist elsewhere — vendors rarely proactively surface this on the customer's behalf, so the practical value depends on the customer actually monitoring and asserting it.
An early enterprise customer negotiates an MFN clause into their SaaS contract. A year later, the vendor offers a new customer of similar size a 20% lower rate. Under the MFN clause, the original customer can invoke the clause to receive the same pricing.
What our lawyers check
- Scope of the comparison — which other customers or deals actually trigger the clause
- Whether the customer must actively invoke it, or the vendor must proactively comply
- What counts as a "more favourable" term — price only, or also non-price terms
- Any carve-outs for promotional pricing or one-off discounts
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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