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What Is The Meaning Of Exclusive Agreement

Exclusiveness can help companies create a competitive advantage by limiting the people their business partners work with. For example, if Company X sold Company Y handbags, signing an exclusive agreement would prevent Y companies from selling or promoting handbags through other channels. Company X could then develop a brand identity around these products and make them exclusive, in the sense that customers could not get the handbags anywhere else. This increases their perceived value; something that Company Y could exploit in the price tag. Another type of contract, which often contains exclusivity clauses, involves the representation of artists or athletes by agents. For example, an agreement between a basketball player and an agent could provide that the player may not be represented by any party other than the agent if he is dealing with basketball teams and advertisers. Such contracts also tend to have an early termination date. Even if the athlete is not satisfied with the agent`s performance, the contract generally cannot be terminated unilaterally before a specific date, unless the player can prove gross negligence on the part of the agent. Full Line Forcing is also called exclusive purchase because it limited the buyer to buy and store only the product of a supplier, which is also considered a single brand.

A company would have participated in the entire line if it imposed on the buyer the following conditions: the entire exclusive trading is covered only if it can be proven to have the effects of a significantly atsued competition [7] . Exclusive trade can provide a significant competitive advantage for businesses, but it can also pose threats such as anti-competitive risks. The most well-known edition of the exclusive trade is called customer closure. [24] Customer silos are an exercise in market power by upstream suppliers that is not accessible by competitors, the resulting in reduces the efficiency of these downstream firms. As a result, the dominant company is able to reduce the quantity or increase the price of the products it has at its disposal due to weakening competition from its competitors. This makes customers vulnerable because it is forced to buy from the dominant supplier. [26] The other drawback is inherent in the agreement itself – exclusivity agreements are legally binding contracts whose violations may be accompanied by severe penalties and fines.