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The Curious Bag
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An exclusivity agreement is when a person or company signs an agreement with another person or company stating that he will not work with a competing company.
Legality
An exclusivity contract is a binding contract. The failure of either company entered in the agreement to uphold the terms of the agreement can result in legal action.
Benefits
Signing an exclusivity contract prevents both parties of a business arrangement from working with a competitor of the other company for the duration of the agreement. This stops either company from unfairly manipulating the market for financial gain.
Time Frame
The length of the exclusivity agreement is important. Once the exclusivity agreement expires, both companies are legally allowed to resume conducting business with competitors of the other company if they wish to do so.
Prevention/Solution
Signing an exclusivity contact with companies that you work with prevents your competitors from utilizing the services of companies that you work with to gain an unfair advantage in the marketplace.
Warning
Working with other companies without an exclusivity agreement leaves your business open to unfair exploitation. This could cause the market value of your company to decline.
Source:
Understanding the Basics of Contract Exclusivity
Sample Contracts: Exclusivity Agreement - Trump Hotels & Casino
Exclusive Contracts and Protection of Investments
Resource:
FCC Issues Order Banning Exclusivity Contract with Cable Providers
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