Define: Favoured-Nation Clause

Favoured-Nation Clause
Favoured-Nation Clause
Quick Summary of Favoured-Nation Clause

The favored-nation clause is an agreement between two parties or countries that ensures equal treatment to each other as any other nation receiving preferential treatment. This implies that if one country grants special privileges to another, the country with the favored-nation clause will also be entitled to the same privileges. This clause is commonly found in contracts, particularly in the oil and gas sector, and is also referred to as a most-favored-nation clause or MFN clause.

Full Definition Of Favoured-Nation Clause

The favored-nation clause is a provision in contracts or agreements between two nations or parties that requires equal treatment for each other as any other nation or party receiving preferential treatment. For instance, if Country A has a trade agreement with Country B that includes a favored-nation clause, and Country B later enters into a trade agreement with Country C that offers better terms than the agreement with Country A, then Country A is entitled to the same improved terms as Country C. This clause can also be found in contracts like oil-and-gas agreements, ensuring equal treatment in terms of pricing and other conditions. Ultimately, the favored-nation clause aims to promote fairness and equality in international trade and other agreements.

Favoured-Nation Clause FAQ'S

A favored-nation clause is a provision in a contract that grants one party the same benefits or terms as those granted to another party in a separate agreement.

If a favored-nation clause is included in a contract, it means that if one party receives more favorable terms or benefits in a subsequent agreement, the other party is entitled to receive the same benefits or terms.

Yes, favored-nation clauses are generally enforceable if they are clearly written and agreed upon by both parties. However, their enforceability may vary depending on the jurisdiction and specific circumstances.

Yes, favored-nation clauses can be included in various types of contracts, such as international trade agreements, investment treaties, or commercial contracts.

Including a favored-nation clause can provide parties with the assurance that they will receive the same favorable treatment as other parties in similar agreements, ensuring fairness and equal treatment.

Yes, parties can modify or waive a favored-nation clause if they mutually agree to do so. This can be done through a written amendment or a separate agreement.

Yes, favored-nation clauses may have limitations depending on the specific language used in the contract. For example, they may not apply to certain types of benefits or may be subject to specific conditions or time limitations.

Yes, a favored-nation clause can be used to challenge discriminatory treatment if it can be proven that another party is receiving more favorable treatment in a similar agreement.

No, a favored-nation clause typically applies to subsequent agreements and cannot be used to renegotiate or modify the terms of an existing contract.

It is always advisable to consult with a lawyer before including a favored-nation clause or any other complex contractual provision. A lawyer can provide guidance on the specific legal implications and help ensure that the clause is properly drafted to protect your interests.


This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 30th April 2024.

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