Exclusivity Clause template clause

    Updated: 24 March 2026

    Please note: these example clauses are intended as a starting point, not as legal advice. Always adapt the text to your specific situation and have important contracts reviewed by a legal professional.

    Clause text

    Article [X] - Exclusivity

    1. During the term of this Agreement, the Supplier shall perform the services or supply the goods described in Schedule [X] exclusively for the Buyer and shall not offer or perform similar services or supply similar goods to any third party operating in [industry / market / region], without the prior written consent of the Buyer.

    2. The exclusivity applies to the following geographic area: [description of territory or "worldwide"].

    3. Notwithstanding paragraph 1, the Supplier is permitted to perform services or supply goods for:
    (a) clients for whom the Supplier was demonstrably already working before the commencement of this Agreement;
    (b) clients who cannot reasonably be regarded as competitors of the Buyer;
    (c) parties that the Buyer has approved in writing in advance.

    4. The Buyer shall compensate the Supplier for the exclusivity by way of [an exclusivity fee of [currency] [amount] per [period] / an enhanced fee structure as set out in Schedule [Y] / the fees agreed in this Agreement, which reflect the exclusivity arrangement].

    5. If the Supplier breaches this exclusivity clause, the Supplier shall pay the Buyer an immediately payable liquidated sum of [currency] [amount] per breach and [currency] [amount] for each day that the breach continues, without prejudice to the Buyer's right to claim full compensation for any additional loss suffered.

    6. The exclusivity obligation applies for the duration of this Agreement. Upon termination, the exclusivity lapses unless a separate non-compete clause applies.

    What does this clause mean?

    An exclusivity clause requires your contracting partner to perform similar services or supply similar goods exclusively for you, and not for competitors. This protects your competitive position and ensures that the supplier devotes its full capacity and expertise to your business.

    Paragraph 4 is critical: exclusivity comes at a price. The supplier forgoes revenue by not being allowed to work for others, and that sacrifice deserves compensation. Without reasonable compensation, the clause is more likely to be deemed unreasonable. Courts assess the validity of exclusivity clauses against the standard of reasonableness and fairness.

    Be aware of competition law implications. Exclusivity arrangements may violate competition law if they appreciably restrict competition. Under EU and national competition law, a block exemption applies to vertical agreements where the market share of each party remains below 30%.

    When should you use this clause?

    Use an exclusivity clause in strategic supplier relationships, distribution agreements, franchise contracts, and partnerships where your competitive advantage depends on exclusive access to capacity, knowledge, or technology.

    Be cautious with overly broad exclusivity arrangements. A clause that is geographically and substantively well-defined is easier to enforce than an all-encompassing exclusivity requirement. If in doubt about competition law compliance, seek legal advice. Where appropriate, combine the clause with a non-compete provision for the period after the contract ends.

    Customize these elements

    • 1Define the scope of exclusivity as precisely as possible: which services, which market, which geographic area. Overly broad formulations are difficult to enforce
    • 2Choose a suitable compensation structure: a fixed exclusivity premium provides clarity, a higher hourly rate is more flexible
    • 3Consider a periodic review (e.g. annually) in which the parties reassess the exclusivity in light of market developments
    • 4Have the liquidated damages provision reviewed for proportionality: an excessive penalty may be reduced by a court

    Sources

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