Why you had better put exclusivity agreements in writing

Always record exclusivity agreements in writing. A verbal exclusivity agreement is valid in principle, but as soon as the other party fails to adhere to it, you must be able to prove its existence and content. Without a signed contract or clear written confirmation, you will almost always be left empty-handed in a dispute. A concise exclusivity clause or a separate exclusivity agreement prevents you from being unable to secure your agreement in legal proceedings.

What is an exclusivity agreement?

An exclusivity agreement is an agreement in which a supplier grants an exclusive right to a single customer. This could be, for example, the exclusive right to purchase certain products, or the right to sell the products in a specific area as the sole dealer or distributor. Consequently, you often encounter exclusivity in a distribution agreement, a reseller agreement , or a dealer agreement.

Exclusivity rarely stands alone. Usually, it is accompanied by a reciprocal consideration. For example, the buyer guarantees a minimum purchase volume, pays a higher or more favorable price, or undertakes an active sales effort. In this way, the agreement remains attractive and balanced for both parties.

Exclusivity agreement or exclusivity clause?

In practice, you establish exclusivity in two ways:

• Exclusivity agreement: a standalone contract that deals entirely with exclusivity. Useful if exclusivity forms the core of the collaboration or if there is no other contract yet.
• Exclusivity clause: a provision within a broader agreement, such as a distribution or reseller agreement. Logical when exclusivity is one of the agreements within a larger collaboration.

In terms of content, both regulate the same thing; the difference lies in the form. More important than the choice between the two is that the agreement is concrete and signed in writing.

Unlimited exclusivity rarely exists

Despite the term “exclusive,” it almost never concerns an unlimited right. In practice, exclusivity is defined along three lines:

• Products: the exclusivity applies to specific products or product categories, not to the entire assortment.
• Scope: exclusivity is limited to an agreed region, country, or customer group.
• Time: the exclusivity runs for a specific period, with agreements regarding extension and termination.

Precisely because exclusivity is clearly defined, different exclusivity agreements can coexist. For example, a supplier may work with a different exclusive partner per region or per product line. Therefore, always agree on what happens after the exclusivity period expires: do existing orders continue, does a run-off arrangement apply, and is the customer allowed to use competing products?

Why verbal exclusivity agreements are so risky

In the Netherlands, freedom of form applies to most agreements: in principle, an agreement is valid even if made only orally. The problem lies not in the validity, but in the proof. Anyone relying on an agreement must make it plausible in legal proceedings. In the case of an oral exclusivity agreement, this means: you must demonstrate that exclusivity was agreed upon and what the exact content of that agreement was.

In practice, this proves to be very disappointing. Agreements are often made in confidence, witnesses are absent or not independent, and casual emails or WhatsApp messages are usually too vague to derive a firm, clearly defined exclusivity agreement. The mere fact that the other party does not reply to a message does not legally mean that they have consented to the alleged agreement.

A typical dispute: proving exclusivity is difficult

You see time and again how this goes wrong in disputes between suppliers and buyers. A common pattern: a wholesaler claims that it was verbally agreed with a supplier that the latter would not supply other Dutch wholesalers. A signed exclusivity contract is missing; there is only email correspondence, and that is not unambiguous. It contains no clear confirmation of the asserted exclusivity.

A few rules on paper would have made the entire discussion unnecessary. After all, the party claiming exclusivity bears the burden of proof and must substantiate the agreement itself.

Without clear written documentation, this is a difficult and costly exercise with an uncertain outcome. The lesson for entrepreneurs is simple: it is better to invest an hour upfront in a clear agreement than months afterwards in an open-ended procedure.

This is how you seal exclusivity watertight

You prevent evidentiary problems by concretely and documenting the exclusivity in writing. This can be done in a separate exclusivity agreement, but also as an exclusivity clause within a broader contractual collaboration. Ensure that it includes at least the following:

1. Who and what: which parties, and to which products or services does the exclusivity exactly apply.
2. Scope: the territory, the customer group and the duration of the exclusivity.
3. Mutual obligations: minimum purchase, sales effort, price agreements or other consideration.
4. Exceptions: existing customers, online sales, or product lines that fall outside the exclusivity.
5. Termination and consequences: notice period, what happens at expiration, and which sanction applies in case of violation.

Preferably, record the agreement in a signed document. If this is not possible in the short term, at least confirm the exclusivity in writing via email and ask the other party to explicitly confirm this confirmation in return. A clear, unambiguous confirmation is legally much stronger than a series of disconnected messages from which you have to deduce the agreement.

An important point of attention is competition law. Under certain circumstances, exclusivity and non-compete clauses may be in conflict with the rules regarding agreements restricting competition. Whether this applies depends on factors such as market share and the duration of the agreement. Therefore, have a broad or long-term exclusivity clause legally reviewed before signing.

Where do things go wrong in practice?

Most conflicts do not arise because parties are malicious, but because the agreement was never properly written down. Therefore, watch out for these pitfalls:

• Exclusivity “grows” silently: a collaboration starts without exclusivity and becomes informally exclusive over time, without anyone formalizing it.
• No end date: without a term and termination clause, uncertainty arises as soon as either party wishes to withdraw.
• No sanction: an exclusivity agreement without a penalty or liquidated damages clause is difficult to enforce, even if the agreement is final.
• Unclear scope: parties disagree retrospectively regarding which products, territories, or customers fall under the exclusivity.

These are all problems that you prevent beforehand with a few carefully formulated provisions.

Frequently asked questions about exclusivity agreements

Is a verbal exclusivity agreement valid?

Yes, in principle, because there are no formal requirements for most agreements in the Netherlands. The sticking point is proof: if the agreement is disputed, you must be able to demonstrate its existence and content, and that is rarely possible without a written record.

What is the difference between an exclusivity agreement and an exclusivity clause?

An exclusivity agreement is a standalone contract that deals entirely with exclusivity. An exclusivity clause is a provision included in a broader agreement, such as a distribution or reseller agreement. In terms of content, they regulate the same thing; the difference lies in the form.

May exclusivity be unlimited in time and territory?

That is risky. Unlimited exclusivity is more difficult to substantiate and is more likely to conflict with competition law. In practice, therefore, exclusivity is almost always defined in terms of products, territory, and duration. Have a broad agreement reviewed in advance.

Does an exclusivity agreement come with a fine or sanction?

That is highly recommended. Without a penalty or damages clause, an exclusivity agreement is difficult to enforce in practice, even if its existence is established. A pre-agreed penalty clarifies the consequences of a breach and strengthens your negotiating position.

Does exclusivity automatically apply to both sides?

No. Exclusivity can be unilateral (only the supplier supplies exclusively to you) or mutual (you, in turn, purchase only from that supplier). Agree on this explicitly, as the direction of the exclusivity often leads to disputes afterwards. Also specify what consideration is provided in exchange for the exclusivity.

What can I do if the other party violates the exclusivity?

First, address the other party in writing and point out the agreement. If you have a well-documented clause including a sanction or penalty, you are in a strong position. If a dispute arises regarding payment or damages, a collection process or legal proceedings may follow. If you are unsure about your position, our legal assistance for entrepreneurs you. Proper documentation in advance significantly increases your chances of success.

Have exclusivity agreements formalized by MKB Juristen

Do you want to arrange exclusivity with a supplier, dealer, or distributor in a legally watertight manner? Our legal experts draft exclusivity agreements and clauses that clearly define the arrangements and protect your position, even if the collaboration only becomes exclusive later. In doing so, we immediately examine the intersections with your distribution or collaboration contract and with competition law.

Want to know more about our approach to contracts? View our expertise in contract law or schedule a no-obligation intake directly. This way, you prevent a good agreement from becoming unprovable later on.