How to review a most favored nation (MFN) clause

A most favored nation (MFN) clause promises that one party will get terms at least as good as those given to others, usually the best price. It sounds simple, but the value of an MFN depends on how it defines who counts as a comparable customer and how anyone will know the promise was broken. This guide covers how MFN clauses work, a checklist of points to check and how to review one in Word with LexDraft.

Last checked: 18 October 2026. The law changes; check the current position before relying on this page.

How MFN clauses work

• Where they appear. In supply, software, distribution and services agreements, usually as a pricing promise from supplier to customer. MFN terms also appear in investment documents, such as some SAFEs and side letters, where an investor gets the benefit of better terms given to later investors.
• Competition law. Competition authorities in the US and elsewhere have challenged MFN clauses in some markets, especially where a party with market power uses them in ways that can raise prices or keep out rivals. Most ordinary commercial MFNs do not raise these issues, but check if either side has a large market share.
• Government contracts. Suppliers on some government contract schedules agree price reduction terms that work in a similar way. Check the specific contract terms rather than assuming a standard MFN.

Clause checklist

• Comparison group. All customers, or only "similarly situated" customers buying similar volumes on similar terms? Vague comparison groups invite disputes.
• What is compared. Unit price only, or the whole package including discounts, credits, payment terms and service levels? A supplier can match on price and differ elsewhere.
• Time period. Does the MFN cover prices given before signing, during the term only, or both?
• Exclusions. Promotional and pilot pricing, government and nonprofit pricing, bundles, settlements and affiliates are commonly excluded.
• How compliance is shown. A duty to notify better pricing, an annual certificate from an officer, or nothing at all? Without a reporting duty, the customer may never know.
• Remedy. A lower price going forward, a refund of the difference back to the date of the better pricing, or a right to terminate?
• Audit. Whether the customer can verify compliance, and confidentiality for other customers' pricing. See our audit rights clause guide.
• Confidentiality obligations to others. The supplier may owe confidentiality to other customers about their prices. Check that the MFN can be performed without breaching those duties.
• Duration and survival. Whether the MFN ends at a fixed date or with the contract, and whether refund claims survive termination.

A MFN clause review workflow in Word

LexDraft is a Word add-in from Microsoft AppSource. It opens as a side panel in Word 365 (Windows and Mac), Word 2021 and Word on the web, so the agreement never leaves the tool you already draft in.

1. Open the agreement in Word and open LexDraft in the side panel.
2. Pick the governing law. Select the state named in the governing law clause so LexDraft looks for state-specific red flags.
3. Run the review. Run the review on the whole agreement. For NDAs, SaaS MSAs, DPAs and services agreements, run the matching playbook on the whole agreement; for other contracts LexDraft runs a general AI review against the governing law you chose. LexDraft has no separate clause-only playbook. The SaaS MSA and Services playbooks review pricing terms as part of those agreements.
4. Triage by severity. Findings are graded Critical, High, Medium or Low, and LexDraft flags standard terms that are missing.
5. Run the quick checks. The defined-term and cross-reference checks are rule-based and run without AI.
6. Accept or reject each redline. Accepted changes land as native Word tracked changes.
7. Verify and sign off. You check every output before it goes to the client or the other side.

Common mistakes

• A promise of the "best price offered to any customer" with no comparison group, which a supplier cannot sensibly track.
• An MFN with no notice, certification or audit duty, so breaches go unnoticed.
• A supplier agreeing an MFN that conflicts with an earlier MFN or a confidentiality promise to another customer.

What LexDraft does not do

LexDraft does not give legal or competition law advice and does not compare prices across your contracts. Nothing changes in your document until you accept a redline.

This guide is general information, not legal advice. LexDraft does not give legal advice; qualified counsel must review every draft. Spotted something out of date? Email support@lexdraft.ai and we will fix it.