Reviewing an exclusivity or non-compete clause

An exclusivity or non-compete clause stops a business from dealing with anyone else, or from competing with the other party, for a period and in a field the other party defines. Its enforceability turns on the restraint of trade doctrine and on competition law, and its scope turns on drafting. I review the clause from whichever side instructs me and return it marked up with a written explanation of what it restrains, whether it is enforceable as drafted, and how to narrow or strengthen it, for a fixed fee of £495 in three working days.

Who this is for

Businesses in England and Wales asked to accept, or wanting to impose, exclusivity or a non-compete in a supply, distribution, agency, franchise, consultancy, joint venture, licensing or services agreement, whether as a stand-alone clause or one of several restrictive provisions. Both parties are businesses; restrictive covenants in employment contracts are governed by their own rules and reviewed under the employment service.

What to look for in an exclusivity or non-compete clause

What the clause restrains: the four dimensions

A restriction has four dimensions: the activity restrained (competing, dealing with others, soliciting, supplying), the product or service it applies to, the territory or customer group, and the duration during and after the agreement. The review reads each against the business's actual activities and plans, identifies the products, customers and territories the business needs to keep open, and redrafts the clause so that it covers what the other party legitimately needs to protect and no more, with existing relationships carved out.

The restraint of trade doctrine and enforceability

A contractual restraint on a business's freedom to trade is void unless it protects a legitimate interest of the party imposing it and goes no further than is reasonable to protect that interest, and a court will not rewrite an unreasonable restraint to make it reasonable. In Tillman v Egon Zehnder Ltd [2019] UKSC 32 the Supreme Court set out when words can be severed from a restraint that goes too far so that the remainder is enforced. The review assesses the clause against the doctrine, identifies the interest the other party can point to (confidential information, customer connections, the goodwill it paid for), and drafts so that the restriction is enforceable rather than ambitious.

Competition law: exclusivity between businesses

An exclusivity, non-compete or exclusive dealing obligation between businesses is an agreement that may restrict competition within section 2 of the Competition Act 1998. Exclusivity in vertical supply and distribution relationships can be exempt under the Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 where the parties' market shares and the duration of the non-compete are within the Order's limits, and a non-compete between competitors is not. The review identifies which relationship the clause sits in, checks it against the exemption's conditions, and flags a restriction between competitors for the closer look it needs.

Duration, and what happens after the agreement ends

A restriction during the agreement protects the relationship; a restriction after it protects the other party at the business's expense. The review checks whether the post-termination restraint runs from the end of the agreement or from the end of a notice period, whether it applies on termination for the other party's breach, whether it is paid for, and whether the period is one a court would enforce for that kind of relationship. It asks for the post-termination restraint to fall away where the other party terminates for convenience or is in breach.

Breach: injunctions, damages and the liquidated sum

The remedy for breach of a restrictive clause is an injunction, which the other party will seek before damages are quantified, and some clauses add a liquidated sum for each breach. The review checks any liquidated sum against the rule in Cavendish Square Holding BV v Makdessi [2015] UKSC 67, under which a sum out of all proportion to the innocent party's legitimate interest is an unenforceable penalty, and checks the clause for an acknowledgement that damages are an inadequate remedy, which the business may not want to give. Where the clause is the other party's standard form, the review considers whether section 3 of the Unfair Contract Terms Act 1977 reaches any exclusion attached to it.

Narrowing the clause, or drafting one that holds

For a business accepting a restriction, the review drafts a narrower clause: activity defined by named products or services, territory by country or region where the other party trades, duration tied to the relationship and a short period after it, carve-outs for existing customers and for products the business already sells, and a reciprocal restriction on the other party where appropriate. For a business imposing one, the review drafts to the legitimate interest, keeps the period short enough to enforce, and separates the restriction into distinct obligations so that an unenforceable part can be severed without losing the rest.

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

The clause stops us working with any competitor of theirs anywhere in the world for five years. Is that enforceable?

A restraint that wide is unlikely to be, because it goes further than any legitimate interest requires, and a court will not cut it down to something reasonable for the other party. The review says so, and drafts the narrower clause you can accept instead.

We want our distributor to sell only our products. Can we require that?

Between a supplier and a distributor an exclusive dealing obligation can be exempt from the Competition Act 1998 prohibition where the parties' market shares and the duration are within the limits of the 2022 block exemption order. The review checks the conditions and drafts the clause to stay within them.

Does the non-compete still apply if they end the agreement?

As drafted, it may apply however the agreement ends. The review asks for the post-termination restraint to fall away where the other party terminates for convenience or is itself in breach, and for the period to run from termination rather than from the end of a long notice period.

Related guidance and services

• Contract review, £495, the service this page describes
• Terms and conditions drafting, £995
• Consultancy and contractor agreements, £595
• Reviewing a non-solicitation clause
• Reviewing a distribution agreement from a manufacturer

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.