Is an exclusive supply agreement worth it?
Exclusivity can be worth accepting when a documented benefit outweighs the stock, cash and switching risk. Negotiate a narrow product scope, achievable commitments, performance conditions and a workable exit, then have a UK solicitor review the wording. Cambridge China Bridge can provide China-side sourcing evidence for that review.
Identify what you gain and what you give up
Clarify the direction of exclusivity. Are you promising to buy only through the UK seller, is the seller promising not to supply your competitors, or are both promises proposed? Ask who is making each promise. If protection depends on factory behaviour, request evidence of the arrangements supporting the seller's promise.
Compare the exclusive offer with a non-exclusive offer against the same specification. Identify the benefit: reserved capacity, development support, protected designs or a price advantage. Weigh it against excess stock, tied-up cash and emergency sourcing costs. Use the supply resilience guide to assess operational dependence.
Keep the covered products narrow
Attach a product schedule naming models, specification revisions, materials and approved variants. Define the territory, sales channels and buyer entities covered. Ask whether spare parts, replacement goods, future designs, substitute products and purchases through associated businesses fall within the restriction.
Propose that additions need written agreement rather than automatically covering everything the seller can source. Record existing suppliers and emergency alternatives as exceptions. If the seller offers customer protection, define the protected customers or channels and ask how compliance will be evidenced without disclosing another customer's confidential information.
Test the minimum commitment against weak demand
Separate forecasts, firm orders, minimum purchases and commitments to pay for reserved stock. Define the measurement period and whether the minimum uses units or spend. Specify how rejected goods, cancellations, returns, credits, freight and price changes affect the calculation. The forecast and call-off guide covers the ordering arrangements behind these commitments.
Model weak demand, delayed delivery and a product being withdrawn. Ask your solicitor to explain what the proposed wording makes payable in each case, including shortfall charges and unused materials. Negotiate exclusions for seller-caused shortages and rejected goods, plus a review mechanism when price or specification changes undermine the original commercial case.
Make continued exclusivity depend on performance
Propose that exclusivity starts after agreed trial acceptance and continues only while the seller meets defined conditions. Specify delivery against confirmed orders, quality against approved specifications, document availability and complaint handling. Give each measure an evidence source and a named review owner. Use the repeat-order scorecard guide to organise the records.
Write the consequence alongside each failure: corrective action, a deadline to remedy, permission to buy affected products elsewhere, or an exit trigger for repeated failure. Define when the purchasing minimum is reduced or suspended and how it resumes. Ask your solicitor to reconcile these provisions with delivery exceptions, liability limits and the seller's standard terms.
Agree an exit that works for unfinished orders
Negotiate the initial term, review date, renewal process and notice method. Ask for clear routes out when performance fails, prices change beyond an agreed mechanism, or the seller cannot supply. Request an explanation of any restriction that continues after exit and any fee for leaving before the agreed end.
Prepare an exit schedule for accepted orders, deposits, finished stock, work in progress, dedicated materials and tooling. State who receives which documents, who arranges handover and how disputed balances are handled. Ask whether emergency purchasing permission leaves other obligations running. Compare the wider wording with the UK seller supply terms guide.
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Give your UK solicitor a decision pack
Provide the draft agreement, product schedule, exclusive and non-exclusive quotes, demand assumptions, trial results and proposed exit schedule. Ask the solicitor to check the contracting parties, governing law, dispute forum, which document takes priority, minimum-payment exposure and how suspension or termination would operate. Request a written explanation of unresolved risks before signing.
Include a separate competition-law review. CMA guidance says each agreement must be assessed in the light of its own facts. Ask about the buying restriction, duration, renewal, protected territories or customers and any resale-price conditions. Cambridge China Bridge's own staff in China can help gather factory and production evidence; use a UK solicitor for the legal assessment.
Frequently asked questions
Is an exclusive sourcing agreement worth signing?
Compare the documented benefit with stock, cash and switching risks. Prefer narrow coverage, achievable minimums, performance conditions and an exit your UK solicitor has reviewed.
Does a forecast count towards minimum purchases?
Ask the solicitor to check the wording. Negotiate separate definitions for forecasts, firm orders, minimum purchases and reserved-stock payments, with clear rules for rejected goods and credits.
Can I buy elsewhere if the exclusive seller is late?
Negotiate explicit permission for affected products when defined delivery conditions fail. Ask how that permission affects minimum purchases and which other obligations continue.
What should happen to stock when exclusivity ends?
Agree an exit schedule covering accepted orders, finished stock, unfinished goods, dedicated materials, deposits and tooling. Have your solicitor check payment exposure and handover wording.