Clause guide
Most Favored Nation Clause clause: meaning, risks, and what to negotiate
Requires one party to give terms that are at least as favorable as those offered to others.
What it means
Most favored nation clauses can restrict pricing flexibility and create ongoing obligations to match better commercial terms offered elsewhere.
Common risks
- • You may be forced to match better deals given to other customers.
- • The clause may apply too broadly across products or services.
- • It can reduce flexibility in pricing and negotiation.
What to check before signing
- • What terms must be matched?
- • Does it apply to all customers or only similar customers?
- • How long does the obligation last?
Negotiation ideas
- • Limit the clause to specific services or customer categories.
- • Exclude one-off promotions or strategic deals.
- • Set a clear time limit for the obligation.
Example clause
“Provider shall offer Client pricing and commercial terms no less favorable than those offered to any similarly situated customer for substantially similar services.”
Frequently asked questions
What is a most favored nation clause?
It is a clause requiring one party to receive terms at least as good as those offered to others.
Related clauses
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