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An exclusivity clause is a contractual agreement where one party commits to engaging exclusively with another party for specified activities. For example, a company may designate a supplier as the exclusive source of water for its North American operations for a two-year term. These clauses can be implicit, such as a promise to purchase all water for a region, effectively creating exclusivity without using the term. Although not frequently found in contracts, they are particularly significant in major business arrangements and can carry substantial financial implications. Violating these clauses can have serious consequences, making adherence crucial.
