The public battle between Ellery and retail giants Myer
and David Jones is now over, with a settlement being reached. And
there is a lesson for us all in dealing with exclusivity
Kym Ellery signed up to a contract with Myer, to supply the
Ellery label exclusively to Myer until 2014. But Myer sued when it
discovered that the label was also being simultaneously supplied
(under a similar exclusivity clause) to its competitor, David
Many designers in the fashion industry (and any suppliers of
high-demand products, really) can expect to see exclusivity clauses
in their contracts, to stop them entering into negotiations with
other purchasers. Such clauses should be reviewed and considered
seriously, as they may have large ramifications on the
Some things to consider when it comes to exclusivity
Is the minimum quantity to be ordered by the purchaser high
enough to justify tying yourself into an exclusive arrangement?
Myer's minimum order for the Ellery collection was said to be
Make sure you are able to terminate the contract early if the
purchaser does not meet the minimum order quantity.
If the contract is terminated due to a fault other than yours,
ensure you are fairly compensated for all loss. This could include
potential future sales or a pre-agreed figure.
Is the duration or type of exclusivity reasonable? Or does it
unreasonably restrict your business? Unreasonable or overly
restrictive exclusivity clauses may be deemed by the courts to be
void and unenforceable.
Save yourself the heartache and don't breach an exclusivity
clause. Consider your termination options instead.
Ellery may consider the above to be lessons learnt, albeit the
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On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
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