39 Free Exclusivity Agreement Templates [Word]

When two partners agree to a buying or selling deal, they may enter into an exclusivity agreement. In the signed document, the buyer or seller agrees not to look for another partner other than the one who signed the exclusivity contract. The purpose of the agreement is to protect a buyer or seller from losing in a deal if the other party finds someone else offering a better deal.

Exclusivity agreements may be signed in commercial leases, production agreements, or goods and services distribution agreements. An exclusivity deal is often referred to as a lock-out or shut-out contract. Once they sign an exclusivity agreement the buyer or seller gets rights to solely negotiate in the transaction without competition from other buyers or sellers.

Exclusivity Agreements

What is an exclusive contract agreement?

An exclusivity contract is entered when two parties want to limit buyer or seller rights. It may involve a product or service offered by a supplier to a seller. In this product exclusivity agreement, the supplier is given the right to solely supply the product to the market. Both parties that sign an exclusivity deal are bound by law to abide by the agreement. 

The party benefiting from the supplier exclusivity agreement keeps all licenses and distribution rights. They may get all rights to purchase a specific product or service.

If they do, the seller is bound by the deal from selling the product or service to any other party. Organizations and individuals often sign an exclusivity deal to protect themselves from competition. 

Exclusivity Contracts

Are there limitations to exclusivity agreements?

Exclusivity agreements give the benefiting party exclusive rights to a product or service. However, the rights are never limitless but are bound by specified limitations. The parties signing the exclusivity contract agree on the limitations to bind themselves with.

The supplier or seller gets their portion of limitations just like the client, user, or buyer.  The rights to an exclusivity deal could be limited due to different factors. Here are different types of limitations that an exclusivity agreement might have.

• Timeline limitations
  The deal is usually bound by a timeframe agreed upon by the signing parties. For example, the parties may agree to the exclusivity deal to last for 90 days. Once that exclusivity period lapses, the parties can no longer be bound by it.
• Product use limitations
  Beyond having an exclusivity period, the parties’ deal may have use limitations. For instance, the product exclusivity agreement may involve software. The developer may limit the other party to what they can do with the software. The user might be prohibited from selling the software or modifying it.
• Advertising limitations
  Ads limitations limit both parties on the types of ads they can do. The exclusivity clauses may limit where the parties can place ads. Ads limitations in a product exclusivity agreement may involve several things.
  The types of product promotions that can be done.
  The types of product-based branding that can be done.
  Types of channels where to do commercial ads of the product.
  The exclusivity period for running ads and promotions.
  Product features that must or cannot be shown in product descriptions.
• Licenses rights limitations
  Licenses rights in an exclusivity agreement may have an exclusivity clause for limitations.  For instance, the exclusivity clause may limit one party from developing another product with similar features. The other party could be bound not to market a complimentary product.
• Geographical limitations
  The exclusivity clauses could include geographical limitations. When signing a supplier exclusivity agreement, the supplier might only be allowed to supply within a specific geographical region. It might cover a state, country, or continent.

Are exclusivity contracts legal?

Exclusivity agreements are legally binding. Both parties in an exclusivity contract are expected to work within the exclusivity clauses of the agreement. They are bound by the exclusivity deal until the exclusivity period lapses. For the exclusivity agreements to be enforceable, they must be designed properly. 

Both parties must be keen not to leave loopholes in the document. If they do, the other party may break the agreement and be free from the consequences. Both parties must sign the exclusivity contract to make it legally binding.

The exclusivity deal must include the names of the involved parties. The parties may agree to seek help from a legal expert to explain to them the exclusivity clauses in the document. 

They need to understand what each exclusivity clause in the document means. This way, they can understand the consequences. The parties will understand the type of exclusivity agreement they are about to sign. 

What exclusivity clauses make an exclusivity agreement legal?

An exclusivity agreement may contain a wide range of exclusivity clauses. Each exclusivity clause adds weight to the impact of the document. Their language and tone are important when designing an exclusivity contract. The exclusivity clauses may conclude the following.

• The type of product or service being offered
  A product exclusivity agreement defines the product or service on offer. It explains what the product is and what it can do. The details of the product may include its features. I may cover its color/s, size, and work. No detail about the product should be left out.
• Terms of the deal
  The terms of a supplier exclusivity agreement may vary. They may include limitations for use and exclusivity rights. These are terms that each party in the exclusivity agreement is willing to be bound by. It may include the exclusivity period and clauses for breaches.
  Payment terms matter the most. What certain price is mentioned for the period of work or lower price or higher price in case of delays, full refund, etc, are some of the examples.
• Details of the parties
  Exclusivity agreements can never be legally binding if the details of the other parties in question are lacking. This includes the names of the parties and their addresses. There have to be telephone contacts and emails of the parties. Without these details, it is impossible to launch a case in court.
• Approvals of the document
  Approvals of the document prove that both parties consented to the offer. It shows both agreed to be bound by the exclusivity clauses in the deal. Approval may include signatures and dates of the deal. Included could also be corporate seals and attorney’s validation.
• Responsibilities of the parties
  Responsibilities means what the parties are expected to do as per exclusive contracts. Most exclusivity clauses say that it is the role each party is expected to play in the supplier exclusivity agreement. Each party must be aware of what binds them to play their role effectively. They must have the capacity to do their part without challenges.

Exclusivity Deals

Are there laws that should be followed when designing an exclusivity agreement?

In every jurisdiction, there are specific laws that govern the signing of agreements. For instance, a buyer exclusivity agreement might be required by local law to be signed before a lawyer. A buyer exclusivity agreement involving real estate is governed by real estate laws. A product exclusivity agreement involving software is governed by software development laws. 

Both parties need to consult with local and national authorities before signing the deal. Consulting helps them understand the existing laws and how they may impact the exclusivity deal. The parties should read the entire agreement in detail. The parties acknowledge this through their formal acceptance.

For instance, signing an exclusivity contract touching on data use could be bound by both local and international law. If any exclusivity clause in the contract ignores the existing laws, the deal might never be legally binding. 

Reading a supplier or buyer exclusivity agreement example is therefore very useful in every regard – from payment terms to period of time for the work. The parties may have an idea of the exclusivity clauses they may include in the document. It is necessary to consult with a legal expert before designing a supplier to buyer exclusivity agreement.

What is an example of an exclusive agreement?

The types of exclusivity agreements signed between different parties may vary. Different factors may influence the design of the product exclusivity agreement. Determinants could be based on what the parties want to achieve. An example of a supplier exclusivity agreement may include the following.

• Exclusive rights to sell digital gadgets
  When product developers design new gadgets, they may offer exclusive rights to specific agents. Electronic devices often attract different types of exclusivity agreements for instance, the producer of a top-selling smartphone or TV may sign a supplier exclusivity agreement with a seller.
  The agreement provides the supplier exclusive rights to supply the product in a given jurisdiction. The supplier exclusivity agreement offers them all the right to get sellers within the region. Some of the contracts may allow them to sign a buyer exclusivity agreement with third parties within the region.
• Exclusive rights to software use
  All electronic gadgets require a certain type of software to run. The software could be an operating system or an app. The manufacturer of the gadget might not be the developer of the operating system or application.
  The developer of the app may decide to sell it to multiple users for an economic advantage. This action could benefit the developer but drive the gadget manufacturer out of the market.
  On the other hand, the user may decide to sell the software to third parties or modify it and thus drive the developer out of business. To protect the parties, they need to sign a product exclusivity agreement. The documents bind both parties on how they use or add more features to the software.
• Exclusivity in product or service marketing
  Manufacturers and designers often sign exclusivity agreements touching on the production and supply of goods and services. Such deals are signed when one party wants to cushion themselves against competition.
  The protection may rum for a limited exclusivity period such as three years or more. During that time, the parties ensure they have recovered their investment in the product.
  They also get an exclusivity period to help them gain some profits after recovering their investments. This allows the parties to stay free from completion until they gain a certain monetary value from the product. This type of agreement contains multiple exclusivity clauses explaining what each party can do or cannot do.

Is there a standardized exclusivity period in a deal?

There is no specific exclusivity period in an exclusivity agreement. It depends on the type of exclusivity deal it is and what both parties want to achieve. The exclusivity period in most exclusivity agreements runs about 30 to 60 days. This period mainly applies to deals involving leases, purchases, renting, and selling properties.

It may touch on product advertisements and testing periods. Some exclusivity agreements may have a longer exclusivity period. The period for some agreements may run up to three years or more. For instance, a supplier exclusivity agreement for electronic gadgets distribution may run for longer periods. His is especially important suppliers who want to launch the gadgets in a new market. 

Due to the amount of investments needed, the supplier may want ample time to get the best ROI. Some jurisdictions may limit how long a buyer exclusivity agreement may run. 

The government may consider the impact such agreements might have on economies and other investors. Due to this, the local law may limit the period for an exclusivity contract.

Product Exclusivity Agreements

Sample of an exclusivity clause

Every exclusivity clause carries deep weight and it must be taken seriously by the parties involved. A single clause may impact the effectiveness of the entire document when it is breached. 

The value of the agreement could be affected by one poorly written clause. The types of exclusivity clauses in an agreement may differ but their wordings could be closely related in many ways. Examples of an exclusivity clause may include the following. 

• The parties agree to be bound by the exclusivity agreement for 2 years.
• The supplier shall not agree with another producer or designer of a similar product during the agreement period. 
• The manufacturer for not give exclusive rights or otherwise to another supplier within the agreed jurisdiction.
• During the exclusivity deal period, no party shall modify the product unless both parties agree on such modifications. 
• The exclusivity contract could be extended for different reasons as defined in the contract. Such reasons should not directly affect any of the parties.  

One of the most important things about exclusivity agreements is that no party should sign unless they understand the terms therein. They should first understand the legal implications of breaching the contract. 

Each party must know the content of the exclusivity period, the exclusivity clauses, and what each means. The parties may seek support from an attorney or another professional.