30-second answer
MOQs and sales targets often serve three purposes: forecasting supply, measuring performance and preserving exclusivity. The contract may fail to say whether a miss causes damages, loss of exclusivity, cure or non-renewal.
Applied situation (illustrative)
Consider a UK distribution scenario: A minimum-purchase target is missed after the supplier changes prices and delays a launch. The parties disagree over whether the shortfall automatically ends exclusivity or requires notice and a chance to cure.
Classify the problem before calling everything “breach”
What the brand should focus on
Brands should define measurement, shipment vs. collection, shortage adjustments, market disruptions and how targets change if the brand itself fails to supply on time.
What the distributor/agent should focus on
Distributors should negotiate quarterly cadence, forecast tolerance, supply assurances, target adjustments and cure mechanisms rather than accepting a single annual number that can become a tool to remove exclusivity.
Clauses and records to check
- Measurement period
- Supply assumptions
- Shortfall adjustment
- Cure opportunity
- Exclusivity downgrade
Check whether the sales target assumed timely supply, stable prices and an agreed measurement period. For a UK relationship, determine whether the intermediary concluded sales for the principal or bought and resold goods. That distinction changes the questions to ask about exit and commission.
Additional point for United Kingdom
Identify whether the relationship is an agency, a buy-and-resell distribution model or a franchise in substance.
Financial exposure and response options
Recalculate the target using the agreed measurement period and document any supply or pricing changes that affected it.
Settlement terms worth writing down
For this UK arrangement, write down how measurement period, shortfall adjustment and exclusivity downgrade will be handled. Set dates and responsibilities for payment or handover, and state what happens if an agreed step is missed.