What is a no-shop (exclusivity) clause in a term sheet?
By SuLe · Updated 22 June 2026
A no-shop clause — also called exclusivity — stops the company from negotiating with, or soliciting offers from, other investors for a set period, usually while the investor completes due diligence. It is one of the few parts of a term sheet that is typically legally binding, even where the rest is not. Exclusivity of around 30–60 days is typical.
Key facts
- A no-shop clause prevents you negotiating with other investors for a set exclusivity period.
- Exclusivity of around 30–60 days is typical — long enough for diligence and documentation.
- It is usually one of the few expressly binding clauses in an otherwise non-binding term sheet.
- Watch the length, what counts as "soliciting", auto-renewal, and any break fee.
- Make sure it lapses if the investor walks away or misses milestones.
What does a no-shop clause actually do?
A no-shop clause commits you not to seek or negotiate competing offers while your chosen investor works toward completion. It gives them confidence to spend time and money on due diligence without you using their term sheet to run an auction.
In return, you get a committed investor progressing the deal. It is a reasonable exchange — provided the period is sensible and the deal is genuinely moving.
The risk is asymmetry. You are locked up, but the investor is usually free to walk. That imbalance is why the length and the get-outs matter so much.
Is a no-shop clause legally binding?
Usually, yes — and this catches founders out. Most of a term sheet is a non-binding statement of intent, setting out the shape of a deal both sides still have to document.
But a handful of clauses are commonly drafted to be legally binding regardless: exclusivity, confidentiality, and who bears costs. So even if you could walk away from the headline terms, the no-shop can genuinely hold you to exclusivity for its period.
Read it as a real obligation, not boilerplate. Breaching an exclusivity clause — for instance by taking another investor's money mid-period — can expose you to a claim.
How long should exclusivity last, and what should I negotiate?
Around 30–60 days is typical and usually workable. That is enough for a diligent investor to complete their checks and draft the long-form documents.
Push back on longer periods, and resist auto-renewal that quietly extends the lock-up. Tie the clock to progress: if the investor is not moving, exclusivity should end.
Also scope what "soliciting" means, so ordinary networking and existing conversations are not accidentally caught, and check for any break fee. The fundraising cluster covers term sheets more broadly; here the focus is keeping the exclusivity fair and finite.
Where does UK law fit?
A no-shop clause is a contractual promise, enforceable like any other binding contract term — there is no specific statute governing it. Its binding nature comes from how it is drafted, not from company law.
That said, the deal it protects sits within the Companies Act 2006, which governs the share issue that follows completion. UK venture term sheets commonly follow the BVCA model approach, where exclusivity, confidentiality and costs are the clauses expressed as binding while the commercial terms remain subject to contract.
Because it is genuinely enforceable, the no-shop is a clause to get right rather than skim.
| Feature | Founder-friendly position | Watch out for |
|---|---|---|
| Length | ~30–60 days | Long lock-ups (90+ days) |
| Auto-renewal | None | Silent extensions |
| "Soliciting" scope | Narrow, clearly defined | Catching ordinary conversations |
| Lapse triggers | Ends if investor stalls or walks | No get-out for you |
| Break fee | None | Fees payable if you exit |
Worked example
Idris and Farah receive a term sheet for their climate-tech seed round from a fund offering £1.5m. The draft includes a 90-day no-shop with automatic 30-day renewals and a broad "no discussions with any third party" clause.
Their solicitor pushes back: exclusivity is cut to 45 days with no auto-renewal, "soliciting" is narrowed so existing angel conversations are not caught, and a lapse trigger is added so exclusivity ends if the fund misses agreed diligence milestones.
Six weeks later the fund's investment committee stalls. Because exclusivity had already lapsed on a missed milestone, Idris and Farah were free to re-open talks with a second fund immediately — rather than sitting locked up for another month.
Where founders go wrong
Assuming the whole term sheet is non-binding
— the no-shop usually is binding, so treat it as a real obligation.Accepting a long or auto-renewing lock-up
— 30–60 days is typical; longer periods leave you stranded if the deal drifts.Not adding lapse triggers
— exclusivity should end if the investor walks or misses milestones, so you can talk to others.Ignoring the definition of "soliciting"
— broad wording can catch ordinary conversations; narrow it so normal networking is safe.
Related questions
What is a no-shop clause?
A no-shop, or exclusivity, clause in a term sheet stops the company from negotiating with, or soliciting offers from, other investors for a set period. It gives the investor time to complete due diligence without you shopping their offer around. It is usually one of the few binding term-sheet clauses. [More: What is a term sheet — and is it legally binding?]
How long should a no-shop period be?
Exclusivity of around 30–60 days is typical. That should be enough for an investor to complete diligence and documentation. Push back on longer periods, and tie the clock to prompt progress so you are not locked up while the investor stalls.
Is a no-shop clause legally binding?
Usually yes — even where the rest of the term sheet is not. Most term sheets are largely non-binding statements of intent, but the exclusivity, confidentiality and costs clauses are commonly drafted to be legally binding. So read the no-shop carefully; it can actually hold you to something.
What should I watch for in a no-shop clause?
Watch the length, what counts as "soliciting" (make sure ordinary conversations are not caught), whether it auto-renews, and any break fee. Also check it lapses if the investor walks away or misses milestones, so you are free to talk to others the moment the deal stalls. [More: Can an investor back out after signing a term sheet?]
The no-shop is often the one clause in a term sheet that can actually be enforced against you, yet founders skim it as boilerplate. A SuLe solicitor can keep the exclusivity short, add the lapse triggers, and make sure you are not locked up while the investor stalls. Book a free term sheet review before you sign.
Keep reading: What is a term sheet — and is it legally binding? · What should a UK seed-stage term sheet include? · What founder protections should I negotiate in a term sheet? · Can an investor back out after signing a term sheet? · What is due diligence — and what will investors ask for? · What is a warrant and why do accelerators use them?
Primary sources: BVCA — model documents for UK venture capital · Companies Act 2006
