Exclusivity clause – What it is, definition and concept

The exclusivity clause is an agreement between two or more people who have entered into a contract between them and undertake not to offer their services to parties other than the contracting parties.

This clause or exclusivity agreement is usually common in commercial law, but also in labor law. It means that the companies or people who have signed this clause will not be able to carry out activities for third parties external to this agreement.

Depending on the regulations of each country, this exclusivity clause can be understood as an annex to a main contract, or the exclusivity itself can be a main contract.

This clause limits the principle of autonomy of will and freedom of competition, and therefore is strongly regulated, especially in European regulations. Exclusivity will only be considered valid if it respects the established rules.

This clause is always associated with commercial concession contracts. What are these contracts? The commercial concession contract consists of the agreement of an entrepreneur (concessionaire) who undertakes to purchase products under particular conditions from another (grantor) and to resell them, on his own behalf, under certain conditions in a specific area.

Characteristics of the exclusivity clause

The main characteristics of this exclusivity agreement are:

  • It is governed by rules of labor and commercial law. But it must also comply with strict rules of supranational organizations.
  • It may be unilateral or bilateral. It may be the two contracting parties who submit to this exclusivity or only one of them.
  • This clause, being so limited because it influences free competition, must determine how long it will be in force. It must also indicate the business or service to which it refers, and even the place where it will be developed (national, regional, provincial, etc.)
  • Although similar, it is not a non-compete agreement.
  • Two requirements are needed for the legality of this agreement: Existence of an express agreement and financial compensation.
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Exclusivity pact in employment contracts

In employment contracts, this exclusivity pact refers to the agreement between the employer and the worker of the sole and full dedication of the worker to the company.

The worker will not be able to provide his services to another company as an employee or even as a self-employed person. It will only provide its services and knowledge to a single employer. Finally, it means a renunciation of the freedom to moonlight by the worker.

Why do companies sign these pacts? In strategic sectors with great innovation and knowledge of workers, such as the technology sector, this type of clause is common. In this way, they ensure that that person does not offer their services to the competition.

In the event that workers who voluntarily sign this agreement breach it, they will result in disciplinary dismissal.

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