This clause requires you to buy a minimum amount of goods or services each month or year—for example, "you must purchase at least 1,000 units annually." Minimum purchase clauses protect the seller's revenue but create financial risk for you if your business slows down or demand drops. You're legally obligated to pay even if you don't need the goods, and you can't simply walk away. This matters because you could be forced to pay thousands of pounds or dollars for inventory you can't sell.
Negotiate the minimum down to a realistic number based on your actual past sales, and include a clause allowing you to reduce it if your business circumstances change materially. Request a "true-up" clause that lets you carry unused purchases forward to the next year instead of losing them. Build in an exit clause if the minimum becomes impossible to meet due to circumstances beyond your control (recession, supply chain failure, etc.).
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires you to buy a minimum amount of goods or services each month or year—for example, "you must purchase at least 1,000 units annually." Minimum purchase clauses protect the seller's revenue but create financial risk for you if your business slows down or demand drops.
Why should I care about this clause?
You're legally obligated to pay even if you don't need the goods, and you can't simply walk away.
What are my options?
This matters because you could be forced to pay thousands of pounds or dollars for inventory you can't sell.