[CA] Can I revise a contract to limit a small buyer’s exclusivity to the U.S. only?
I need to revise a proposed agreement to make it more neutral or favorable to me.
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Then change to conditional and narrow exclusivity:
- Trigger: Exclusivity starts only after company meets a minimum purchase threshold within a set time (§2306 (UCC 2-306)).
- Scope: Limit exclusivity to the branded version. Manufacturer can sell identical/similar products under its own brand or to others, with notice and “approval not to be unreasonably withheld.”
Make exclusivity U.S.-only and explicit. Example language:
“Company grants [COMPANY] exclusive rights to import, market, distribute, and sell the Products under the Brand within the United States only. Company retains all rights to manufacture, distribute, and sell the Products under Company's brand or to any third party in all markets outside the United States. Any expansion beyond the United States requires a separate written agreement.”
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I need to revise a proposed agreement to make it more neutral or favorable to me.
Jon
Which terms are you looking to change?
Exclusivity clause, term of agreement, and adding a product agreement sheet that we’ll revise every few months.
Jon
Got it. Can you share the document (or parts) here?
It’s a contract manufacturing agreement. Client is a CA company; manufacturer is outside the U.S.
Jon
What specific language are you concerned about?
“Company shall act as the contract manufacturer, producing the Products exclusively for [COMPANY] under Brand, unless otherwise agreed by the Parties.”
“[COMPANY] shall have the exclusive right to import, market, distribute, and sell the Products in the United States, with potential extension to other global markets upon mutual written consent, subject to compliance with applicable Regulatory Requirements.”
Jon
You want to know if (1) the manufacturer is restricted to produce only for the company, and (2) whether this could be worldwide—right?
Yes.
Jon
- Clause 1: Yes—this creates manufacturer exclusivity for products under the brand (exceptions only if both parties later agree in writing).
- Clause 2: U.S. exclusivity now, with possible expansion to other countries if both agree in writing.
My client is the manufacturer. The company is a small-quantity buyer. We want to work with other clients until order volume/market share is big enough to justify exclusivity. We also want freedom to market the same product in the U.S. (with prior approval). How do we frame the non-U.S. piece to block any international exclusivity?
Jon
Then change to conditional and narrow exclusivity:
- Trigger: Exclusivity starts only after company meets a minimum purchase threshold within a set time (§2306 (UCC 2-306)).
- Scope: Limit exclusivity to the branded version. Manufacturer can sell identical/similar products under its own brand or to others, with notice and “approval not to be unreasonably withheld.”
Make exclusivity U.S.-only and explicit. Example language:
“Company grants [COMPANY] exclusive rights to import, market, distribute, and sell the Products under the Brand within the United States only. Company retains all rights to manufacture, distribute, and sell the Products under Company's brand or to any third party in all markets outside the United States. Any expansion beyond the United States requires a separate written agreement.”
Perfect. Thanks!
Jon
Happy to help!
Jon
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