What It Does
Exclusivity is one word doing three jobs, and counsel get into trouble when they treat them as one. A no-shop locks a seller to your deal during diligence. An exclusive supply term locks a buyer to one source. An exclusive license hands sole IP rights to a single partner. Each carries its own duration norms and its own antitrust exposure, so the first move is naming which one you are negotiating.
When You'll See It
Exclusivity shows up across deal types: M&A letters of intent, supply and distribution agreements, licensing deals, and reseller or channel contracts. The wording varies most by purpose, since a 45-day M&A no-shop and a multi-year exclusive supply term protect different interests. It is the rare clause where antitrust law sets an outer limit beyond ordinary contract law. See also: most favored nation, right of first refusal, and change of control.
Examples
Alternus Clean Energy, Inc.
LiiON, LLC, Heads of Terms
M&A no-shop · 30-day period
One-Sided
2024
"During the Exclusivity Period ... the Seller, its affiliates and its associates shall abstain from selling the Company or any of its assets to any third party and from directly or indirectly conducting any solicitations, discussions or negotiations with any other third party for the sale of the Company or any of its assets."
Source
Harvard Apparatus Regenerative Technology, Inc.
Distributor, Distribution Agreement
Distribution exclusivity · Multi-year
One-Sided
2024
"for the duration of the Exclusivity Period, the Company shall sell the Products exclusively through the Distributor and shall not engage or authorize any other third-party distributor, agent, or vendor, whether within or outside the Distributor’s territory, to distribute or sell the Products globally."
Source
Arcus Biosciences, Inc.
WuXi, Amendment No. 4 to License Agreement
Supply exclusivity · Backup-supplier carve-out
One-Sided
2023
"Prior to the expiration of the Manufacturing Exclusivity Period, Arcus may procure supply of drug substance ... from its designated backup supplier solely in the event WuXi is not able to supply Arcus with drug substance for Licensed Products in accordance with the terms of the Manufacturing Agreement."
Source
GPM Investments, LLC
Oak Street Real Estate Capital, Third Amendment to Standby Real Estate Purchase, Designation and Lease Program
Real-property exclusivity · Right to be offered first
One-Sided
2023
"During the ... Exclusivity Period ... Seller shall not sell or designate any Property pursuant to a sale-leaseback (or similar leasing) transaction, without first offering such Property ... in accordance with the terms and conditions of this Agreement."
Source
Aspire Global Inc.
Aspire Science and Technology Limited, Intellectual Property License Agreement
Exclusive IP license · Perpetual, territory-limited
One-Sided
2023
"... and wish to grant to Licensee a sole and exclusive perpetual right and license in the Territory ... to the same, including to the exclusion of Licensors, in accordance with the terms of this Agreement."
Source
TuHURA Biosciences, Inc.
Kineta, Inc., Exclusivity and Right of First Offer Agreement
M&A no-shop · “Exclusivity Parties” defined
One-Sided
2024
"Kineta agrees that it shall not, and shall cause its affiliates and their respective officers, directors and representatives (collectively, the “Exclusivity Parties”) not to, directly or indirectly: (a) solicit, initiate, or knowingly facilitate or knowingly encourage (including without limitation by disclosure of non-public information) ..."
Source
Negotiate
YOU GAIN THE PROTECTED POSITION
Define the scope precisely: the products, services, territory, and channels the other side is locked out of.
Set a duration that matches the investment you are protecting, with renewal tied to performance.
In M&A, make the no-shop binding even where the rest of the letter of intent is not, and bar both solicitation and acceptance of competing offers.
Keep the exclusivity period long enough to complete diligence, with a clear long-stop date.
YOU GIVE UP OPTIONS
Add minimum-purchase or performance benchmarks so exclusivity converts to non-exclusive if volumes fall short.
Carve out existing customers, unsolicited inbound, and a backup supplier for when your counterparty cannot perform.
Cap the duration and add a termination right for breach or change of control.
Pressure-test the deal against antitrust exposure if either side has real market power, since exclusive dealing that forecloses a large share of a market draws rule-of-reason scrutiny.
Red Flags
Perpetual or auto-renewing exclusivity with no performance condition, which courts may treat as an unreasonable restraint.
An exclusive supply term with no minimum commitment, where UCC Section 2-306 still implies a best-efforts duty that can surprise the buyer.
Exclusivity granted by a dominant party that forecloses much of a relevant market, raising Clayton Act exposure.
An M&A no-shop with no fiduciary out in a public-company deal, which can conflict with board duties.
No carve-out for a backup supplier, leaving the buyer exposed when the exclusive source cannot deliver.
FAQs
Related Clauses
Most Favored Nation
A contractual provision guaranteeing one party terms at least as favorable as those the other party gives to anyone comparable.
Right of First Refusal
A contractual provision that lets a designated party match a bona fide third-party offer before the owner can sell to that third party.
Non-Compete
A contractual provision that restricts a party from competing with the other for a defined time, area, and scope of activity.
Change of Control
A contractual provision that triggers rights or obligations when one party is acquired or undergoes a change in ownership.
Indemnification
A contractual provision in which one party agrees to cover specified losses or third-party claims that the other party incurs.
This content is for informational purposes only and does not constitute legal advice.