Law & contractsen
Exclusivity clause
A contractual clause granting one party an exclusive right (to sell, purchase or supply) within a defined territory or segment.
An exclusivity clause is a contractual stipulation whereby one party commits to reserving an exclusive right for the other in a defined area: distribution, purchasing, supply, or service provision.
Types of exclusivity:
- Distribution exclusivity: the supplier may only sell to the designated distributor in a given territory
- Purchase exclusivity: the distributor commits to sourcing exclusively from one supplier
- Brand exclusivity: the distributor may only market the supplier's products (not competitors')
Legal constraints in the EU:
- The Vertical Block Exemption Regulation 2022/720 governs exclusivities in vertical agreements
- Exclusivities should not exceed 5 years to benefit from the block exemption
- Passive sales (responding to unsolicited orders) can never be prohibited
- Online sales restrictions are strictly regulated
The clause must precisely define the territory, products covered, duration, and conditions for revocation or non-renewal. Reasonable notice is required when ceasing exclusivity.