# Exclusivity Clause

Source: https://contracko.com/clause-library/exclusivity

# Exclusivity Clause

Restricts one or both parties from dealing with competitors within a defined market, product or territory.

## What it is

An exclusivity clause commits a party to deal only with the other for certain goods, services or territories, for example a sole distributor or single-source supply arrangement. It can be mutual or one-sided and is usually time-limited.

## Why it matters

Exclusivity rewards investment and channel commitment, but it can also foreclose competition. Under EU and Dutch competition law, overly broad or long exclusivity may be void, so scope and duration must be carefully calibrated.

## How to apply it

- Define precisely the products, customers, channels and territory covered.
- Limit the duration and tie it to minimum performance or volume targets.
- Check the EU vertical block exemption thresholds before drafting.
- Include carve-outs and an exit if performance targets are not met.

## Sample wording

> During the Term, the Supplier shall not appoint any other distributor for the Products within the Territory, provided the Distributor meets the agreed minimum annual purchase volumes.

## Negotiation tips

- • The exclusive party should accept matching minimum-purchase or best-efforts obligations.
- • Add a right to convert to non-exclusive if targets are missed instead of full termination.

## Common pitfalls

- • Drafting exclusivity so broad or long that it breaches competition law and is void.
- • Granting exclusivity without any matching commitment from the favoured party.

### How Contracko helps

Contracko centralises all distribution and supply agreements, making it easy to see at a glance which territories, products or channels are already covered by exclusivity obligations. AI analysis flags the expiry dates and performance thresholds tied to each exclusive arrangement, and smart reminders notify you before a minimum-volume review window closes.

## Legal references

- [Mw art. 6 Dutch Competition Act: prohibition of restrictive agreements Dutch law](https://wetten.overheid.nl/BWBR0008691)
- [VWEU art. 101 EU prohibition on restrictive agreements EU law](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:12012E/TXT)

Unless marked otherwise, references are to Dutch law (Burgerlijk Wetboek, the Dutch Civil Code); EU instruments such as the GDPR apply across the EU. This is general information, not legal advice. Other jurisdictions treat these concepts differently. Verify the current text and your situation with a qualified lawyer.

## Relevant for

[Retail & Wholesale](https://contracko.com/industries/retail-wholesale)[Manufacturing](https://contracko.com/industries/manufacturing)[Logistics & Distribution](https://contracko.com/industries/logistics)[Music](https://contracko.com/industries/music-industry)[Franchise](https://contracko.com/industries/franchise)

## Related clauses

- [Category Exclusivity Clause](https://contracko.com/clause-library/category-exclusivity)
- [Non-Compete Clause](https://contracko.com/clause-library/non-compete)
- [Purchase Obligation / Minimum Take](https://contracko.com/clause-library/purchase-obligation)
- [Minimum Contract Duration](https://contracko.com/clause-library/minimum-contract-duration)
- [Termination for Cause Clause](https://contracko.com/clause-library/termination-for-cause)

## Related terms

- [Non-compete](https://contracko.com/glossary/non-compete)
- [Consideration](https://contracko.com/glossary/consideration)
- [Term (duration)](https://contracko.com/glossary/term)

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## Frequently asked questions

Common questions about this clause.

- **Q:** Is an exclusivity clause always enforceable?
  **A:** Not necessarily. Competition law can void exclusivity that is too broad, too long, or held by a party with market power.

- **Q:** Can exclusivity be made conditional on volume?
  **A:** Yes, and this is good practice: linking exclusivity to minimum purchases keeps it commercially justified and easier to defend.

- **Q:** What EU safe harbour applies to exclusive distribution?
  **A:** The EU Vertical Block Exemption Regulation (VBER) generally exempts exclusive arrangements where both supplier and buyer have market shares below 30%, subject to certain hardcore restrictions.

- **Q:** What happens when the exclusive party misses its volume targets?
  **A:** The contract should specify the remedy: converting to non-exclusive, reducing the territory, or triggering a right to terminate. Without such a provision, the exclusivity may remain even when the targets are not met.

- **Q:** Can a party grant the same exclusivity to two different parties?
  **A:** No. Granting overlapping exclusive rights is a breach of both agreements. Mapping existing exclusivity obligations in a central repository before signing a new deal avoids this risk.

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