Exclusivity Agreements In New Zealand: What Businesses Need To Know

If you’re negotiating a new supplier deal, lining up a distributor, or bringing on a commercial partner, you’ll often hear the words “we want exclusivity”.

An exclusivity agreement can be a smart way to protect your investment (time, money, relationships and IP). But if it’s drafted poorly, it can just as easily lock you into the wrong deal, limit your ability to grow, or create a dispute you didn’t see coming.

In this guide, we’ll break down what exclusivity agreements are in a New Zealand context, when they’re commonly used, what clauses matter most, and how to negotiate something that actually works for your business.

Note: This article is general information only and isn’t legal advice. Exclusivity arrangements can carry different legal risks depending on your industry and the specific contract terms.

What Is An Exclusivity Agreement (And When Would You Use One)?

An exclusivity agreement is a contract where one party promises not to deal with certain competitors, customers, suppliers, or channels for a defined period and scope.

In simple terms, it’s a “you’ll only work with us (for this thing, in this place, for this time)” promise.

Exclusivity can appear as:

• a standalone exclusivity agreement;
• an exclusivity clause inside a broader contract (like a supply agreement or distribution agreement); or
• a short “exclusivity deed” signed while you negotiate a bigger deal (often called a lock-out arrangement).

Exclusivity agreements are common in New Zealand small business deals, especially where someone is making an upfront commitment or taking a commercial risk. For example, if your partner is spending money on marketing, stocking inventory, training staff, or securing premises, they may want certainty that you won’t offer the same product to someone else down the road.

Common Exclusivity Agreement Scenarios For SMEs

Exclusivity shows up in a lot of day-to-day commercial relationships, including:

• Supplier exclusivity: you agree to buy certain goods only from one supplier (or they agree to supply only you in a region).
• Distributor exclusivity: you appoint one distributor for a territory and agree not to appoint others there.
• Referral and lead generation deals: a marketing partner wants to be your exclusive referral partner in a channel.
• Service provider arrangements: you engage a contractor or consultant who agrees not to provide similar services to your direct competitors (or you agree to use only them).
• Software and IP commercialisation: you grant an exclusive licence to use IP in a particular field of use or territory (often tied into broader commercial terms).

It’s also common to see exclusivity discussed alongside other business-protection agreements, like a Non-Disclosure Agreement (if you’re sharing sensitive information during negotiations).

How Does An Exclusivity Agreement Work In Practice?

Exclusivity is only as clear as the wording you use. Most disputes happen because the parties assumed they meant the same thing, but the contract didn’t spell it out.

To work properly, an exclusivity agreement needs to clearly define:

• who is restricted (one party, both parties, related entities, staff, contractors);
• what is restricted (products, services, customer list, category, channel);
• where it applies (New Zealand-wide, a city, a sales territory, online only);
• how long it lasts (fixed term, rolling term, renewal); and
• what happens if someone breaches (termination rights, damages, injunctions, repayment of incentives).

“Exclusive” Doesn’t Always Mean Total Exclusivity

People often assume “exclusive” means “no one else, ever”. But in reality, there are different levels of exclusivity, for example:

• Exclusive supplier: you must purchase 100% of a product range from that supplier.
• Exclusive territory: the supplier can sell to others, just not in your territory.
• Exclusive channel: you get exclusivity for online sales, but not physical retail (or vice versa).
• Exclusive customer segment: you’re the only partner allowed to service a defined customer type.

When you’re drafting or reviewing an exclusivity agreement, your job is to convert the commercial handshake into precise definitions so it can actually be enforced (and so you don’t accidentally promise more than you intended).

Key Clauses To Include In An Exclusivity Agreement

There isn’t a one-size-fits-all exclusivity agreement. The “right” clauses depend on whether you’re the party giving exclusivity (taking on the restriction) or receiving exclusivity (getting the benefit).

That said, these are the clauses most New Zealand businesses should think about before signing.

Scope Of Exclusivity

This is the heart of the deal. It should clearly state:

• what products/services are covered (be careful with broad terms like “all goods”);
• which competitors (if any) are relevant;
• which customers or customer types are included; and
• which sales channels are included (online store, marketplaces, wholesale, direct B2B).

If you sell multiple product lines, you may want exclusivity to apply only to a particular SKU range or brand, not your entire business.

Territory (Including Online Sales)

Territory clauses often sound simple until online sales complicate things. If your agreement says “exclusive in Auckland”, does that prevent the other party from selling to an Auckland customer via their website? What if the customer is located in Auckland but the delivery address is elsewhere?

It’s usually worth including rules about:

• where the customer is located;
• where goods are delivered;
• how online ads are targeted (for example, geo-targeted campaigns); and
• whether passive sales are allowed (e.g. an unsolicited order from outside the territory).

Term, Renewal And Exit Rights

Exclusivity can be commercially valuable, but it can also become a handbrake if you can’t exit when performance isn’t there.

Common approaches include:

• fixed term: e.g. 6–24 months, with renewal by agreement;
• rolling term: continues unless terminated with notice; or
• trial exclusivity: short exclusivity period while performance is tested.

From a risk-management perspective, you’ll usually want clear termination rights for things like non-payment, reputational harm, repeated quality issues, or failure to meet minimum commitments.

Minimum Performance / Minimum Purchase Commitments

If you’re giving exclusivity to someone (like an exclusive distributor), you generally want them to earn it.

That’s where performance clauses help, such as:

• minimum purchase volumes per month/quarter;
• minimum sales targets;
• marketing obligations (e.g. spend, campaigns, trade show attendance); or
• service levels (response times, staffing, availability).

If these targets aren’t met, you can build in options to reduce the territory, convert to non-exclusive, or terminate.

Pricing, Promotions And Brand Control

Exclusivity deals often come with brand expectations. You might need to manage:

• recommended pricing and discounting;
• who approves promotions;
• how the brand is used in marketing; and
• quality control standards (especially if services are delivered under your name).

This is also where it’s useful to have your broader commercial terms properly set up, such as clear Business Terms for your customer-facing sales and supply relationships.

Confidentiality And Intellectual Property

Exclusivity arrangements often involve sharing pricing, customers, strategies, and product information. You’ll want confidentiality obligations that cover:

• what counts as confidential information;
• how information can be used (only for the relationship);
• who can access it (employees, contractors); and
• what happens when the relationship ends (return/destruction of info).

On the IP side, spell out who owns what, and whether the other party is getting a licence (exclusive or non-exclusive) to use your materials.

If you’re granting rights to use your IP, it may be worth getting the relationship captured in a tailored contract structure (for example, an Service Agreement for services, or a licensing arrangement where appropriate).

Dispute Resolution And Remedies

If exclusivity is breached, the damage can be quick and hard to unwind. Your agreement should make it clear what remedies are available, such as:

• termination for breach;
• damages or indemnities (where appropriate);
• repayment of incentives, rebates, or marketing contributions; and
• urgent injunctive relief (a court order to stop the conduct).

You can also include a practical dispute process (for example, senior negotiation first, then mediation, then court).

Legal Risks And Compliance Issues To Watch In New Zealand

Exclusivity agreements are generally legal in New Zealand, but they can create risk if they’re unfair, misleading, or anti-competitive in effect.

Getting advice early is important, because the risk profile depends heavily on your industry, market power, and how broad the exclusivity is.

Fair Trading Act 1986 (Marketing And Representations)

Exclusivity is often used as a selling point (“we’re the exclusive distributor” or “only available here”). If you make exclusivity claims in advertising or sales discussions, you need to be confident they’re accurate.

Under the Fair Trading Act 1986, misleading or deceptive conduct (or misleading representations) can create liability. Practically, this means:

• don’t claim you’re “exclusive” if the agreement doesn’t actually grant exclusivity; and
• be careful with statements like “only supplier” or “sole rights” if there are carve-outs.

Commerce Act 1986 (Competition Issues)

Exclusivity can sometimes raise competition concerns, particularly where it has the purpose, effect, or likely effect of substantially lessening competition in a market (for example, locking up key suppliers or customers in a way that makes it harder for others to compete).

The Commerce Act 1986 is complex and fact-specific, so it’s wise to get advice if the exclusivity is:

• long-term and difficult to exit;
• very broad (all products, all customers, NZ-wide);
• tied to pricing restrictions or other restraints; or
• in a market with limited alternative suppliers or routes to customers.

Most small business exclusivity agreements won’t raise issues, but you don’t want to accidentally build a contract that becomes unenforceable or creates regulatory risk.

Employment And Contractor Crossover

Sometimes businesses try to achieve “exclusivity” by requiring staff or contractors to only work for them.

This is a different risk category. For employees, restraint and exclusivity clauses need to be reasonable and tied to a legitimate business interest. For contractors, you still need to be careful that the arrangement is genuinely a contractor relationship and not employment in disguise.

If your exclusivity arrangement is tied to someone performing work for you, it should sit neatly alongside your core engagement terms in an Employment Contract (for employees) or a tailored contractor agreement for independent contractors.

How To Negotiate An Exclusivity Agreement That Actually Helps Your Business

Exclusivity can be a win-win, but only when the obligations are balanced.

Before you sign anything, take a step back and ask: “What problem is exclusivity solving here?” If the answer is “trust” or “fear”, there may be other ways to structure the deal (like performance milestones, better reporting, or shorter terms) without locking yourself in too tightly.

Practical Negotiation Tips (Without Overcomplicating The Deal)

• Start narrow, then expand: a short trial exclusivity period is often safer than committing to multi-year exclusivity from day one.
• Use clear carve-outs: for example, allow existing customers, legacy contracts, or specific channels (like your own website) to remain non-exclusive.
• Link exclusivity to performance: if targets are hit, exclusivity continues; if not, it reduces or ends.
• Define what counts as a competitor: broad competitor definitions can stop you from doing completely unrelated work.
• Plan the break-up: think about stock buy-backs, customer handover, return of marketing materials, and what happens to confidential information.

Don’t Forget The “Relationship” Clauses

Exclusivity is one promise in a bigger relationship. You also want the agreement to cover:

• ordering and delivery terms;
• payment terms and credit risk;
• warranties and liability allocation;
• reporting obligations (so you can track performance); and
• what happens if there’s a major disruption (supply chain issues, regulatory changes).

Depending on the deal, you might capture this in a broader commercial contract framework, like a Supply Agreement (where the commercial relationship is supply-focused) and then include a well-drafted exclusivity schedule or clause within it.

Key Takeaways

• An exclusivity agreement is a contract where a party agrees not to deal with others in a defined scope, territory, and period, and it’s common in supplier, distribution, and commercial partnership deals.
• Exclusivity needs to be drafted clearly, including exactly what’s exclusive, where it applies (including online sales), how long it lasts, and what counts as a breach.
• Strong exclusivity agreements usually include performance triggers (like minimum purchases or sales targets) so exclusivity is “earned” and can be reduced or terminated if targets aren’t met.
• In New Zealand, exclusivity can raise legal issues if it leads to misleading claims (Fair Trading Act 1986) or if it risks substantially lessening competition (Commerce Act 1986), so it’s important to get the wording right.
• Exclusivity is only one part of the commercial relationship, so you should make sure the surrounding terms (pricing, payment, liability, IP, confidentiality, termination) are properly documented.
• Because exclusivity can restrict your future options, it’s worth getting the agreement reviewed or drafted so it fits your business model and growth plans from day one.

If you’d like help drafting or reviewing an exclusivity agreement (or building it into a broader commercial contract), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.