The “Most Favoured Nation” (MFC) clauses require a supplier to give a “recipient” customer a price at least as low as the best price given to its other customers (or “on no less favourable terms”). They have been in different forms, but are often found in trade agreements in the energy and resource sector. A most preferred customer clause (MFC) requires a supplier to offer the lowest price to the beneficiary of the clause. Therefore, if A has an MFC, he can claim damages if the supplier sells less to B. In some circumstances, the result is a concern about cartels and abuse of dominance that the supplier will refuse to give up B for fear of having to lower the price to A, which could increase price rigidity and create a barrier to entry. In addition, it is alleged that a MFC could support the exchange of potentially problematic information and reduce the costs of monitoring a cartel by focusing on dementia. Please “follow” us to ABiz Corporation for the latest information from our team of contract professionals. While price consideration is certainly important when a contract is negotiated, it should not be the only thing that is considered. If a preferred customer clause is included in the negotiations, pricing becomes one of the main factors taken into account. Customers` preferred clauses can come in a number of forms. However, trade agreements are most common in the energy and resource industries.
This is at the expense of customers who are not privileged customers. If you are negotiating with a supplier to include a clause in your contract, it is helpful that the supplier does not enter a preferred customer with someone else. Over the past two years, the most customer-friendly clauses have grown in importance in the two main systems of agreement. Within the European Union, this took the form of a little-respected but potentially significant agreement with the Hollywood majors, who regulated their investments in new film equipment. In the United States, litigation over the most favoured customer clauses of a major health insurer, Blue Cross Blue Shield of Michigan, continues to make headlines. The approach taken in these cases can have a significant impact on the multiplicity of contracts that currently apply the clauses of the most favoured clientele.