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In the video, Simon from the Contract Company discusses the essential clause that distributors should seek in a distribution agreement: exclusivity. He explains that as a distributor receiving goods from a supplier, having exclusive rights allows the distributor to market and sell those goods without competition in their designated region. This exclusivity ensures that the distributor is the sole entity with the rights to distribute the product, which is crucial for justifying their investment in marketing. Simon emphasizes the importance of safeguarding these exclusive rights to maximize their potential in the market.