Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What does exclusive dealing refer to?

1. Contracting to exclusively supply one vendor

2. Being bound to purchase from or sell to only one business

3. Offering exclusive promotional rights to multiple vendors

4. Creating a partnership between several businesses

The correct answer is: Being bound to purchase from or sell to only one business

Exclusive dealing refers to arrangements where a buyer is required to purchase goods or services from a specific supplier, or a seller is bound to sell only to a particular buyer. This type of arrangement can limit the options available to both parties, as the buyer is restricted to acquiring products solely from that supplier, while the supplier might concentrate on fulfilling the needs of just that buyer. In the context of competitive markets, exclusive dealing can influence market dynamics by potentially restricting competition, as it may inhibit other suppliers from gaining access to those buyers. This contractual obligation, where either the purchaser must only buy from one vendor or the seller must sell solely to one purchaser, characterizes the nature of exclusive dealing agreements. Other choices do not capture the essence of exclusive dealing. Simply contracting with one vendor for supply does not encompass the buying restrictions imposed on the buyer, while offering exclusive promotional rights to multiple vendors suggests division rather than restriction. Lastly, creating partnerships between several businesses diverges from the sequential obligations that define exclusive dealings.