Glossary

No-Shop Clause

Also known as: exclusivity clause, standstill provision

A provision, often one of the few binding terms in an otherwise non-binding LOI, obligating the seller to negotiate exclusively with the prospective buyer and to cease marketing or soliciting competing offers for a defined period.

Because buyers incur significant sunk cost during due diligence — third-party reports, legal fees, financing commitment costs — before a PSA is even signed, a no-shop clause protects that investment by preventing the seller from using the buyer's LOI as leverage to solicit a higher bid elsewhere or from simply continuing a broad marketing process in parallel. No-shop periods are typically time-bound to align with LOI-to-PSA negotiation timelines and sometimes tiered — a shorter exclusivity window to reach a signed PSA, followed by a longer one covering the due diligence and closing period. Breach remedies are often weak in practice, since many no-shop clauses lack a liquidated damages provision, so buyers sometimes negotiate for the exclusivity commitment to be paired with a modest deposit or reimbursement obligation to give it real teeth.