What Is a Carve-Out in a Contract?

A carve-out is an exception written into a restriction — for example, a non-compete that does not apply to a named product line, or an exclusivity clause that still lets you serve existing customers. It takes something specific out of a broader promise, so the restriction covers everything else but not what the carve-out names.

Analyze my contract — free Full mechanics: 7 Things to Negotiate Before You Sign a Contract (2026)

Why it matters

A carve-out can decide whether a restriction leaves room for the business you already have. Without one, a broad promise can reach work, clients or products you never meant to give up.

How common is it?

In the 510 public-company commercial contracts of the CUAD dataset (The Atticus Project, CC BY 4.0), 76 (14.9%) contain a carve-out from a non-compete, exclusivity or no-solicit clause.

Among contract types with at least 20 contracts in the set, it shows up most in co-branding agreements (10 of 22), collaboration agreements (6 of 26) and sponsorship agreements (7 of 31).

These are larger-company deals, not a sample of every contract — a reference point, not a rule. Full method: /data/cuad.

What to watch for

Carve-outs that protect only the other side.
Vague wording such as “existing business” with no list.
Carve-outs that end early while the restriction runs on.

A realistic example

A freelance photographer agrees to shoot only for one furniture brand for a year. The contract has no carve-out, so a long-standing client that also sells sofas is now off-limits.

What to ask for

A written list of the clients, products or activities the restriction does not cover.
The same carve-outs for both sides if the restriction is mutual.

Related terms: non-compete · exclusivity clause · uncapped liability

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Not legal advice. This is an educational definition of a common contract term. Details vary by jurisdiction — this page explains common U.S. usage. For high-stakes agreements, have a lawyer review the final version.