Reviewing a most favoured customer clause

A most favoured customer clause promises that no other customer gets a better price or better terms, and it is asked for by customers and resisted by suppliers. Its terms decide what is compared and with whom, whether the supplier must disclose its other contracts, and what the remedy for a breach is. Some versions also attract competition law scrutiny. I review the clause from whichever side instructs me and return it marked up with a written explanation of what it compares, the risks it carries, and the changes the other side will accept, for a fixed fee of £495 in three working days.

Who this is for

Suppliers in England and Wales asked to give a most favoured customer commitment in a supply, software, services or distribution contract, customers asking for one, and platforms and sellers dealing with price parity clauses in marketplace and agency agreements. Both parties are businesses.

What to look for in a most favoured customer clause

What is being compared: price, terms, and with whom

The clause should say what is compared (unit price, discount, total cost, payment terms, service levels, all terms), with which other customers (all customers, customers buying comparable volumes, customers in the same sector or territory), over what period, and how differences in volume, term, specification and bundling are accounted for. The review narrows a wide clause to the price of the same product at comparable volume on comparable terms, in the same territory, and excludes promotional, trial, legacy and settlement pricing.

Competition law: parity clauses and the block exemption

A clause that requires a supplier to give a customer terms as good as those it gives anyone else is, between a supplier and a customer, an agreement that may affect competition and falls to be assessed under section 2 of the Competition Act 1998. Retail parity obligations imposed by online platforms, requiring a seller not to offer better prices through other channels, receive particular attention: the Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 withholds its exemption from wide retail parity obligations that extend to other platforms, while narrow parity relating to the seller's own direct channel may be exempt. The review identifies which kind of clause is in play and whether it needs the closer assessment competition law requires.

Disclosure, audit and the supplier's price book

A customer cannot know whether the clause is honoured without seeing the supplier's other deals, so the clause will carry a certification, a disclosure obligation or an audit right. The review asks for certification by an officer rather than disclosure of other customers' contracts, which are confidential to them, for audit by an independent accountant reporting only whether the clause was breached, and for the audit to be limited in frequency and scope. For a customer, it drafts the certification so that it covers the comparisons that matter and carries consequences if false.

The remedy: retrospective adjustment, credit or termination

The clause should say what happens if a better deal is found: a price reduction going forward, a retrospective credit for the period of the breach, or a right to terminate. The review checks the retrospective reach, asks for a cure period during which the supplier may adjust the price, and checks that any sum payable is a reflection of the difference in price rather than a penalty, which would be unenforceable under the rule in Cavendish Square Holding BV v Makdessi [2015] UKSC 67. Interest on a credit that becomes a debt runs under the Late Payment of Commercial Debts (Interest) Act 1998.

The commercial cost of the clause to the supplier

A most favoured customer commitment stops the supplier discounting to win a new customer, offering introductory pricing, settling a dispute with a credit, or pricing a different channel differently, without triggering a claim from the customer holding the clause. The review sets out what the clause will cost the supplier in its own pricing decisions, and drafts exclusions for new customer pricing for a defined period, volume-based pricing, settlements, and pricing in other territories and channels.

Drafting for the side you are on

For a supplier, the review drafts a narrow clause: same product, comparable volume and terms, same territory, forward-looking adjustment only, certification rather than disclosure, and a list of exclusions. For a customer, it drafts a clause that compares the price the customer cares about with the customers it competes with, carries a retrospective credit and an audit right, and makes the supplier's certification a warranty.

What it costs

Standard review, £495. Marked-up document and a written explanation of the changes. Three working days.

Buying online forms the engagement on payment. The scope is what the contract review page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• Your own contract returned with my amendments as tracked changes, plus a clean version with every change accepted, ready to send to the other side
• Comments in the document where a point needs explaining
• A written explanation of what I have changed and why, by email or as an attachment if it is lengthy, marking the points I would hold firm on and the ones that are negotiable
• A view on what is normal market practice and what is the other side pushing their luck
• One round of follow-up questions by email, included

What is not included

• Negotiating directly with the other side, which I quote separately once I know who is on the other side. Where the other side is willing to share a live document, I can work in that document directly
• Drafting a replacement contract from scratch
• Advice on the law of any jurisdiction other than England and Wales
• Tax, accounting or regulatory advice
• Disputes about a contract that is already signed

Questions I am often asked

A big customer wants a most favoured customer clause. What will it cost us?

The freedom to price other deals differently: introductory offers, volume discounts, settlements and other channels all become potential breaches. The review narrows the comparison, adds exclusions and replaces disclosure of your price book with a certification.

Is a price parity clause with our marketplace legal?

That depends on its width. A clause stopping you offering better prices on other platforms is excluded from the block exemption and needs careful assessment; one limited to your own direct channel may be exempt. The review identifies which you have and what it means.

We found out another customer pays less. What can we claim?

Only what the clause provides, which may be a forward adjustment, a retrospective credit or a right to terminate, and only if the other customer's deal is within the comparison the clause defines. The review checks the comparison and the remedy against the facts.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Reviewing a price adjustment or indexation clause
• Reviewing a marketplace seller agreement

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.