Exclusivity Agreement Template: What To Include In The UK

If you’re negotiating a new supply deal, scouting a distribution partner or testing a strategic collaboration, you may want confidence that the other side won’t shop the opportunity around. That’s where an exclusivity agreement comes in.

Below, we walk you through what an exclusivity agreement is, when it makes sense to use one, how UK competition law affects your options, and the key clauses you’ll want to include. We’ll also share a clear exclusivity agreement template outline you can build on with your legal adviser, so you’re protected from day one without tripping compliance risks.

What Is An Exclusivity Agreement?

An exclusivity agreement is a contract that limits one or both parties from dealing with competitors or alternative partners for a defined period, territory or category of goods/services. In simple terms, it’s a promise to deal only with each other for the scope you agree.

Exclusivity can be the entire point of the contract (a standalone exclusivity agreement), or it can be a clause within a broader commercial contract (for example, an exclusivity clause inside a supply, distribution or services agreement). If you’re going down the clause route, it’s worth getting the exclusivity clause right, because courts and regulators will look closely at its scope and effects.

Common exclusivity formats include:

• Exclusive supply: the supplier agrees to supply only the buyer for certain products or within a territory.
• Exclusive distribution: the supplier appoints a distributor as the only authorised reseller in a territory or customer segment.
• Exclusive dealing/single-branding: the buyer agrees not to buy competing products from anyone else, sometimes in exchange for better pricing or support.
• Deal process exclusivity: during negotiations or due diligence, both sides agree not to negotiate the same deal with others for a window of time.

Exclusivity often sits alongside other protective terms like confidentiality (via an NDA) and non-circumvention commitments (to stop a party bypassing you to deal directly with your contacts). If you’re still framing the commercial deal, you can capture headline terms and exclusivity in a short-form Heads of Agreement while you negotiate the full contract.

When Should Your Business Use One?

Exclusivity is a strategic tool. It can unlock investment from your side (and theirs) by making the relationship predictable for a period. You might consider an exclusivity agreement if:

• You’re investing in launch costs, tooling, marketing or training that only makes sense if your partner isn’t promoting a competitor at the same time.
• You want channel clarity - for example, giving a reseller a territory with exclusivity to avoid channel conflict and overlap.
• You need breathing space to test demand, build stock or integrate systems without being undercut by parallel partners.
• You’re in sensitive deal talks and want a “no-shop” or “no-talk” period so the other side can’t leverage your offer to solicit bids from others.

Equally, there are times to avoid blanket exclusivity. If you’re still validating fit, a short, limited non-solicit or “first right of negotiation” can be safer than a multi-year exclusive. If your model uses multiple routes to market, an exclusive distribution might clash with an existing Reseller Agreement or your direct e‑commerce channel. It’s about matching scope to commercial reality.

Also think about the nature of the arrangement. If the partner is your sales representative or introducer, you may be looking at an agency relationship. In that case, pairing exclusivity with the right agency agreement terms (like authority limits and commission rules) matters just as much.

Are Exclusivity Agreements Legal In The UK?

Yes - exclusivity agreements are generally lawful in the UK, but they must be drafted carefully to comply with competition law and the common law on restraint of trade. There are three key compliance angles to consider.

1) UK Competition Law (Competition Act 1998 and VABEO)

Agreements that restrict competition may infringe the Chapter I prohibition in the Competition Act 1998 if they have the object or effect of preventing, restricting or distorting competition in the UK. However, many vertical agreements (i.e. between businesses at different levels of the supply chain) benefit from a safe harbour if your market shares are limited and you avoid “hardcore” restrictions.

In particular, the UK Vertical Agreements Block Exemption Order 2022 (VABEO) provides a framework that may exempt certain vertical exclusivity arrangements if conditions are met, such as:

• Each party’s relevant market share does not exceed 30%.
• The agreement avoids hardcore restrictions (for example, resale price maintenance, restricting passive sales outside an allocated territory in most scenarios, and wide parity obligations across all sales channels).
• Any non-compete obligation is limited in duration (typically not more than 5 years) and scoped proportionately.

If you’re near the thresholds or contemplating tight territorial/customer restrictions, get tailored advice before signing. Even if VABEO doesn’t apply, some exclusivity terms can still be individually assessed as compliant - but that requires careful analysis of market effects and efficiencies.

2) Restraint Of Trade (Reasonableness)

Courts can refuse to enforce an exclusivity or non-compete clause that goes further than reasonably necessary to protect a legitimate business interest. Reasonableness is judged by scope, geography and duration. In practice, this means you should define exactly what’s exclusive, keep the territory no wider than you need and set a supportable time limit.

3) Related Contract Law Controls

Standard contract law also applies: there must be clear terms, consideration (value exchanged), and valid execution. Any liquidated damages linked to exclusivity breaches must reflect a genuine pre-estimate of loss rather than a penalty. And if you’re mixing exclusivity with minimum purchase obligations, ensure the performance mechanics are realistic and measurable.

If you’re unsure where to draw the line, a short “process” exclusivity (deal talk exclusivity) is often lower risk than a long-term market exclusivity. You can also ringfence categories, customers or channels to avoid overreach, and combine exclusivity with sensible carve-outs.

What To Include In An Exclusivity Agreement Template

A good exclusivity agreement template should be clear, targeted and enforceable. Here are the key building blocks to include and tailor for your deal.

Scope Of Exclusivity

• Who is restricted? One party or both. If mutual, confirm symmetry or differences.
• What’s covered? Specific products, SKUs, services, categories or named opportunities.
• Where does it apply? Territory (UK-wide, region, online channel), customer segments or sales channels.
• What activities are restricted? Selling, marketing, soliciting, appointing others, or engaging with identified targets.

Duration And Milestones

• Start and end dates, or a clear trigger (e.g. from signature, from product launch).
• Milestone-based continuation (e.g. exclusivity continues if minimum purchases are met each quarter).
• Sunset or review dates to reassess scope, especially if market conditions change.

Consideration And Performance

• What’s the value exchanged for exclusivity? Better pricing, marketing contributions, training, or guaranteed volumes.
• Minimum purchase/targets, with forecasting and cure mechanisms if a quarter is missed.
• Service levels or promotional commitments (for distributors or resellers), ideally aligned with your Distribution Agreement or sales terms.

Carve-Outs And Exceptions

• Legacy customers, existing tenders, or strategic accounts already committed.
• Incidental sales through unavoidable channels (e.g. marketplace backorders) if truly outside control.
• Regulatory requirements or compliance with competition law.

Non-Circumvention And Non-Solicitation

• Prevent backdoor approaches to your suppliers, customers or contractors, complementing any non-circumvention clause.
• Limit poaching of key staff directly involved in the arrangement for a reasonable period.

Confidentiality And IP

• Keep the deal and commercial information confidential, whether in a stand-alone NDA or integrated clause.
• Clarify ownership of IP, marketing materials, and data generated during the exclusive period.

Compliance With Law

• Competition law compliance statement and, where relevant, acknowledgement of VABEO conditions (e.g. duration caps and market-share thresholds).
• Obligation to cooperate on any regulatory queries.

Remedies For Breach

• Right to injunctive relief for urgent breaches (exclusivity harm is often hard to quantify).
• Liquidated damages with a sensible methodology (e.g. based on lost margin from overlapping sales) rather than punitive sums.
• Audit or reporting rights to verify compliance in good faith.

Termination And Exit

• Termination for material breach (with a cure period where appropriate).
• Termination tied to missed targets for consecutive periods.
• Post-termination obligations: outstanding payments, return of confidential information and clear end to exclusivity.

Boilerplate That Matters

• Entire agreement and no reliance provisions (especially important if you discussed broad ambitions during sales pitches).
• Assignment/novation controls if the other side sells the business - you might want a right to approve or exit, and a structured novatio‍n or assignment process.
• Governing law and jurisdiction (commonly England & Wales) and notice provisions that reflect how you actually communicate.

If any of the above feels complex, that’s normal - exclusivity touches commercial strategy and regulatory guardrails. It’s wise to use professional contract drafting support so the final wording matches your market and risk profile.

Exclusivity Agreement Template Outline You Can Build On

The following outline shows how a UK exclusivity agreement can be structured. Treat this as a starting point only - exclusivity needs careful tailoring to your sector, market shares, channels and existing contracts. Before you sign anything, get a quick contract review to check enforceability and competition law risks.

1. Parties And Background

• Identify the parties (legal names and company numbers if applicable).
• Short recitals explaining the products/services and commercial context.

2. Definitions

• Define Products/Services, Territory, Customers, Channels, Exclusive Period, Minimum Purchase, Confidential Information.

3. Grant Of Exclusivity

• Clear statement of the exclusive rights granted (e.g. “Supplier appoints Partner as its exclusive distributor of the Products within the Territory during the Exclusive Period”).
• Set out any mutual exclusivity obligations on the buyer (e.g. single-branding commitments).
• List carve-outs (existing customers, pre-agreed accounts, regulatory exceptions).

4. Term And Milestones

• Start and end date of the Exclusive Period.
• Renewal or extension mechanism tied to performance milestones or a review meeting.

5. Consideration And Commercial Commitments

• Pricing or discounts offered in return for exclusivity.
• Minimum purchase targets per quarter, with forecasting, reporting and cure provisions.
• Marketing support, training, or promotional obligations of each party.

6. Competition Law And Compliance

• Mutual warranty that the agreement is intended to comply with UK competition law and VABEO conditions where applicable.
• Agreed process to vary scope if a compliance issue is identified.

7. Confidentiality, Non-Circumvention And Non-Solicitation

• Confidentiality terms or cross-reference to a separate NDA.
• Non-circumvention commitment covering suppliers, manufacturers and key customers shared for the purpose of the arrangement.
• Reasonable non-solicit of staff directly involved in delivering the arrangement for a short period.

8. Reporting, Audit And Records

• Sales/progress reporting frequency and content.
• Slim audit rights (e.g. by independent accountant) limited to verifying compliance with exclusivity and targets.

9. Breach, Remedies And Suspension

• Material breach triggers and cure periods.
• Right to seek injunctive relief for threatened or actual exclusivity breaches.
• Liquidated damages methodology, if used, with a statement it is a genuine pre-estimate of loss.
• Suspension options instead of immediate termination if performance dips but recovery is realistic.

10. Termination And Effect Of Termination

• Termination for cause (breach, insolvency, compliance issue) and for convenience (if agreed).
• Consequences: settlement of outstanding amounts, stock run-off rules, end of exclusivity, and return/destruction of confidential information.

11. General (Boilerplate)

• Entire agreement, variation in writing, no partnership/agency (unless intentionally structured as such), assignment/novation controls, notices, governing law/jurisdiction.

Tip: If this exclusivity sits inside a broader commercial deal (for example in a distribution or services contract), make sure the exclusivity section aligns with the rest of the agreement: pricing adjustments, SLAs, territories, and IP terms should all tell a consistent story. If you’re using a short-form MOU to kick off negotiations, keep exclusivity tightly time‑boxed and consider pairing it with a separate NDA or Memorandum of Understanding that sets expectations while you finalise the definitive contract.

Common Pitfalls To Avoid

• Over-broad scope: catching products or channels you never intended, which can strain growth plans and raise competition concerns.
• Open-ended terms: no end date or review mechanism - courts and regulators prefer defined durations.
• No performance link: giving exclusivity without minimums or review points can lock you into an underperforming partnership.
• Missing carve-outs: forgetting existing commitments or strategic accounts that need to sit outside exclusivity.
• Ignoring related restrictions: check how non-compete, non-solicit and pricing obligations interact, and avoid anything that looks like resale price maintenance.
• DIY templates: one-size-fits-all language often fails under UK law or conflicts with your channel strategy - a tailored draft avoids nasty surprises.

If you also plan to restrict post-termination competitive activity, be mindful that non-compete clauses must be tightly justified and time‑limited to remain enforceable.

Key Takeaways

• An exclusivity agreement gives both sides clarity and confidence - but it must be precisely scoped by product, territory, channel and time.
• UK competition law and the VABEO framework set practical guardrails. Keep market shares, duration and restricted activities within reasonable bounds.
• Build in performance targets, milestones and review points so exclusivity tracks commercial reality, not wishful thinking.
• Pair exclusivity with confidentiality, non-circumvention and sensible carve-outs, and make sure it aligns with your Distribution or Reseller Agreement.
• A clear template outline is a helpful start, but avoid generic wording. Get professionally drafted terms and a quick legal review before you sign.
• If in doubt, consider a shorter “process exclusivity” while you test the relationship, then expand scope once performance is proven.

If you’d like help tailoring an exclusivity agreement or sense‑checking your clause against UK competition rules, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no‑obligations chat.