As a buyer, you may want to ensure that the supplier is limited to delivering the specific goods you purchase exclusively from you in your geographic area and not to other buyers in the same region. You may not want other companies competing with you to sell the same products in your area. The opposite would be a non-exclusive agreement. In this case, the supplier may deliver the same goods to other buyers in the same territory. It was said that the original exclusivity clause between Apple and AT&T would last five years, but exceptions and “out” clauses allowed Apple to sell through other carriers a few years after the release of the first iPhone. The wording and implementation of the clause with AT&T also helped Apple create a model for deals in other countries where AT&T did not offer service. Exclusive purchase agreements that require a distributor to sell the products of a single manufacturer can have a similar effect on a new manufacturer and prevent it from bringing its products to enough outlets for consumers to compare its new products with those of the leading manufacturer. Exclusive purchase agreements may infringe antitrust law if they prevent new entrants from competing for sales. For example, the FTC found that a pipe fittings manufacturer had unlawfully maintained its monopoly on locally produced ductile fittings by requiring its distributors to purchase household pipe fittings exclusively from it and not from its competitors attempting to enter the domestic market. The FTC concluded that this manufacturer`s policy prevented a competitor from making the sales necessary for effective competition.

In another case, the Department of Justice challenged exclusive contracts used by a manufacturer of artificial teeth with a market share of at least 75%. These exclusive contracts with major distributors effectively prevented small competitors from selling their teeth to dental laboratories and, ultimately, from being used by dental patients. In similar situations, new entrants may face significant additional costs and delays in persuading merchants to abandon exclusivity agreements with the leading company or create another way to present their product to consumers. The harm to consumers in these cases is that the monopolist`s actions prevent the market from becoming more competitive, which could lead to lower prices, better products or services, or new choices. The next section should examine which party supplies goods or services exclusively to the other party. Mention that during the term of the contract, the seller is not allowed to advertise, sell or ask for the product from other parties. Also describe the fact that the buyer is not allowed to purchase the product from another seller. The decision to use an exclusivity clause can bring a number of advantages. When negotiating this clause, both parties must ensure that it works on both sides. You may want to negotiate higher compensation because you are limiting future work or opportunities. Some of the reasons to consider this type of agreement are: An exclusive product clause is similar to the exclusivity clause, but requires the supplier to only sell the product to you. This can often apply to online businesses that don`t have a definitive geographic location.

Most exclusivity clauses include some sort of warranty on the product. If the seller provides a product that is not in the condition described, he must provide either a new product or a full refund for the defective items. The buyer in an exclusivity agreement should have the opportunity to inspect all products at the time of receipt. For example, many bloggers work with companies to promote their goods or services. These agreements may include exclusivity clauses to prevent the blogger from writing about similar products or services in a short period of time, which can lead to confusion among readers and potential customers. Bloggers could trade for shorter periods of time where they only have to promote the brand and then have the freedom to switch to other options. Competition law is an important issue for all actors in a supply chain. Review the goods or services included in the terms of the agreement. Specify the minimum recommended selling price for all goods or services listed in the clause. The buyer must be prepared to pay this price for the product during the term of the contract. Contracts can give a discount to a buyer if the buyer promises to get a certain percentage of their purchases from a particular seller. Other contracts can guarantee a buyer that they will receive a price at least as good as all other buyers.

As with exclusive distribution and demand agreements, these agreements may prevent certain companies from competing for the buyer`s or seller`s business. The legality of these rules depends on various factors and can only be determined on a case-by-case basis. Competition law issues may arise in the “upstream” supply chain (e.g. B in the purchase of goods/services) and also in the “downstream” supply chain (e.B. in the way goods/services are sold). Delivery is an important aspect of an exclusivity clause, so talk about how the goods or services are delivered. Provide details about product delays and how to handle them, and expedited shipping options can be included if the seller offers them. Describe which party is responsible for paying taxes on the goods, including local, federal, and state taxes. The duration of an exclusivity clause depends on what is in the contract.

It can be as short as a few months or as long as several years. Most do not extend beyond 5 to 10 years, but it depends on the parties involved. A 100% contractually watertight exclusivity clause can still be challenged if it violates EU or UK competition law (in which case exclusivity is unenforceable and, in some cases, the parties may even face fines). The application of competition law to such clauses can be complex and requires a detailed analysis in each case. You may also be excluded from buying or selling goods for a certain period of time, depending on the terms of the agreement. Exclusivity agreements between franchisors and franchisees are often stricter than those between other parties. Before you sign anything, negotiate the terms until you feel comfortable with what you`re getting into by signing the agreement. .