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Manage Exclusivity Agreement Template

Manage Exclusivity Agreement Template

Aug 6th, 2022

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How to Manage Exclusivity Agreement Template

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An exclusivity clause is a contract that restricts one party to engage with only one other party for specific activities. For example, a company may designate a supplier as their exclusive source for water in North America for two years. These clauses can vary in wording; some may not explicitly use the term "exclusive" but still create an exclusive commitment, such as agreeing to purchase all water from a single supplier. While not extremely common, exclusivity clauses can arise in significant business agreements and often hold considerable financial implications. Violating these clauses can lead to serious repercussions.

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What are the key terms of exclusivity agreement?

An exclusivity clause mandates that the parties who have signed are legally restricted to sell or purchase goods to or from a single party. The buyer is restricted from promoting, buying, or using similar products from any other vendor or provider.

What does exclusivity agreement do?

Also known as a lock-out, shut-out or no-shop agreement. An agreement used to try to ensure that a party to a prospective transaction negotiates solely with a particular prospective transaction counterparty for an agreed period of time.

What is an example of exclusivity agreement?

Exclusivity clauses provide reassurance to buyers by limiting the actions that a purchaser can take with competitors after signing an agreement. For example, a phone manufacturer may agree to only sell their phones through a specific cell phone service provider.

Are exclusivity agreements enforceable?

An exclusivity clause in an employment contract restricts workers from taking on additional work with another employer. As with other restrictive covenants, they are only enforceable if they are designed to protect a legitimate business interest and are reasonable.

Is an exclusivity agreement legal?

Exclusive dealing or requirements contracts between manufacturers and retailers are common and are generally lawful.

How do you structure an exclusivity agreement?

Clearly state that both parties have elected to enter into the agreement based on their interest and free will. Then, outline the terms upon which both parties agree. The next section should cover which party will provide goods or services exclusively to the other.

What is an exclusive agreement?

In simple terms, an exclusive dealing contract prevents a distributor from selling the products of a different manufacturer, and a requirements contract prevents a manufacturer from buying inputs from a different supplier.

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