This clause requires you to buy all your supplies, services, or products from one specific supplier or seller, rather than shopping around. It removes your freedom to choose vendors based on price, quality, or convenience. In competition law (both UK and US), exclusive dealing can be illegal if it unfairly locks out other suppliers from the market, though courts allow it if there is a genuine business reason and it is not too restrictive. For example, a petrol station might agree to buy all its fuel from one oil company, or a retailer might agree to stock only one brand of soft drinks. The risk is that you lose negotiating power and may end up paying more or receiving worse service because the supplier knows you have no alternatives.
Avoid this clause if possible, or limit it strictly—for instance, agree to buy 80% of your needs from one supplier rather than 100%, or set a time limit of 1-2 years instead of indefinitely. Build in a price review clause so you can renegotiate if costs become unreasonable, and include an exit clause if the supplier fails to meet quality or delivery standards. If you must accept it, ensure the supplier commits to competitive pricing and service levels in writing. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires you to buy all your supplies, services, or products from one specific supplier or seller, rather than shopping around.
Why should I care about this clause?
It removes your freedom to choose vendors based on price, quality, or convenience.
What are my options?
In competition law (both UK and US), exclusive dealing can be illegal if it unfairly locks out other suppliers from the market, though courts allow it if there is a genuine business reason and it is not too restrictive.
How does this affect small businesses?
For example, a petrol station might agree to buy all its fuel from one oil company, or a retailer might agree to stock only one brand of soft drinks.