This clause says you must give one customer the same price, terms, or conditions you give to any other similar customer. It matters because it locks you into pricing and prevents you from offering better deals to other buyers. For example, if you sell software to Company A at $10,000/year under an MFN clause, you cannot later sell the same software to Company B at $8,000/year—you'd have to drop Company A's price too. This clause is common in international trade and protects the buyer from being treated worse than competitors, but it removes your flexibility.
Avoid this clause entirely if possible, especially if you work with many customers at different volumes or in different markets. If the other party insists, limit it narrowly—for instance, say it only applies to customers in the same industry, or exclude volume discounts and promotional pricing, so you keep room to negotiate with others. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause says you must give one customer the same price, terms, or conditions you give to any other similar customer.
Why should I care about this clause?
It matters because it locks you into pricing and prevents you from offering better deals to other buyers.
What are my options?
For example, if you sell software to Company A at $10,000/year under an MFN clause, you cannot later sell the same software to Company B at $8,000/year—you'd have to drop Company A's price too.
How does this affect small businesses?
This clause is common in international trade and protects the buyer from being treated worse than competitors, but it removes your flexibility.