If you are a business owner looking to establish a one on one relationship with your supplier and vendor, then this article is here to subside your worries and show you a way to achieve all this in a legal way.

Exclusivity agreement is your solution when a supplier or buyer is looking to hold and retain a certain edge in the market over the competitors, so as to achieve a certain level of optimum performance regarding goods and services.

This article will explain the workings of an exclusivity agreement in detail, and give information about its templates well. So, let's get started.

What Is an Exclusivity Agreement?

As its name suggests, it gives both parties some sort of exclusive features in return for some monetary advantages.

The core of the agreement is that it binds a supplier or a seller, to a vendor or a buyer, in a way that they can only buy and sell the certain types of goods in question, between themselves.

The seller is asked by law, and held liable as well, to sell certain goods as specified by the agreement, only to the buyer in the agreement. Similarly, the buyer is also held liable by law to buy certain goods, as given in the agreement, by the seller in the agreement.

In this way, an exclusivity agreement is formed between the two parties that subjugate them to carry out the transaction of certain goods only between themselves.

This agreement has many small clauses and complications as well. It doesn't bring the parties together without any incentive. The incentives are two-ways between the two parties and can be of a varied nature.

Who Will Need an Exclusivity Agreement?

This agreement is mostly used between the two parties, in which one is a designated seller and the other is a designated buyer. The businesses that really gain advantages from this sort of businesses are listed below:

Restaurants and Fast-food Chains

Many food restaurants and fast-food chains have made an exclusivity agreement with the local or international suppliers of raw food material.

These businesses form such agreements under the terms that the supplier provides them with quality raw food on special discounted rates so that they may retain an edge in the market by using these quality products.

The supplier of raw food materials sells these materials on wholesale to the buyer so at the end of the day, exclusivity agreement helps both of the parties.

Specialized Organizations

Specialized organizations go into an exclusivity agreement with their complementary organizations in order to retain a specialized environment of their own, in which the services are exchanged only between the two organizations in the agreement.

This gives them an edge in the market that allows them to make the most out of their business.

What Is Included in an Exclusivity Agreement?

The various components of the agreement, the included clauses and other information included in the agreement are as follows :

  • The seller and the buyer form the first and foremost feature of the agreement. It is very necessarily a buying and selling agreement, where a seller can only sell and the buyer can only buy the goods stated in the agreement, from one another.
  • The seller agrees to make timely deliveries for the order of the buyer, so that no party may face any consequences that may affect their working or costs them the loss of valuable revenue.
  • The seller agrees to make the due payments in an extremely punctual manner. The payments shall be made as by the manner given. Sometimes, the payments are made in advance, and cash payments are made upon the receiving of the order.
  • The buyer holds the reselling rights to the goods given by the seller. The buyer can sell the goods on any rate starting from the default MSRP rates, and the details are told and highlighted in the agreement.
  • A very important part of the exclusivity agreement is definitely the standard of the services or goods being bought and sold. The buyer holds the right of close inspection of the goods, see if they match his needs and return or retain the goods on his own terms.
  • This ensures that the basic element of specialized care is upheld at all times. This is the basic feature of the exclusivity agreement.
  • The warranty is under the care of the seller and the taxes are under the care of the buyer. The seller gives some warranty on the goods he sold, whereas the buyer is liable to cover all the expenses of the taxes imposed by the law of the state on the goods.
  • The termination of the agreement shall occur if either of the parties is declared bankrupt, held by their creditors or they fail to make the required payments (buyer) or deliveries (seller).
  • The agreement is not held upright, in case of war, famine, natural disasters, or any act of God.
  • In case of any dispute between the parties in the agreement, the method of arbitration is used. The arbitrator is usually specified and agreed upon in advance by both parties in the agreement. It is a neutral party.
  • The parties involved in the agreement shall follow all the rules of exclusivity agreement, including confidentiality of the information, liable by law to not disparage the name of the other party even after the termination.
  • Also, two parties must keep each other updated at all times on the status of the deliveries and the payments.
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Conclusion

Exclusivity agreement binds a seller and a buyer in a lawfully liable agreement, places certain conditions on them, along with well-defined rewards as well, so as to make the agreement viable and acceptable.

CocoSign’s law experts have provided variety exclusivity agreement templates for different business owners on the website. Think no further and get yourself a free template of exclusivity agreement on CocoSign now!

Disclaimer

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