Legal Definitions - most-favored-nation clause

A most-favored-nation clause is a provision in an agreement between two countries or parties that requires each to treat the other as well as it treats any other nation or party that is given preferential treatment.

For example, if Country A has a trade agreement with Country B that includes a most-favored-nation clause, and Country B later signs a new trade agreement with Country C that gives Country C better trade terms than Country A, then Country A can demand the same better trade terms from Country B.

The most-favored-nation clause can also be included in other types of contracts, such as oil-and-gas contracts. In these cases, the clause requires that the parties involved treat each other as well as they treat any other party that is given preferential treatment.

Overall, the most-favored-nation clause is designed to promote fairness and equality in international trade and other types of agreements.