First, the basics. Make sure you have a contract in writing.  And make sure you know whom your channel partner really is.  Check them out through public sources.

So what should this written, signed contract with your true channel partner include? Here is a rough guide, but please bear in mind that it can be very beneficial to tweak contracts.

By way of a warning, you can have the greatest contract in the world, but if it contains just one clause, which is in breach of competition regulations, the entire contract can be declared void.

This is a real problem, as distribution agreements can include a wide range of provisions, which by their nature can be seen as anti-competitive.  Such provisions include resale price maintenance and territorial restrictions.

We recently caught and fixed an EU hard-core restriction (bonuses or discounts linked to resale price schedules, i.e. price fixing).  What we could not fix were the dozens of agreements that had already entered into force - all containing the same provision!

At the beginning, you should define your distributor's territory, what products will be sold in it and in what capacity the distributor will be acting.  You’re not obliged to give your channel partner your entire product range – present or future.

Remember that territory can be defined by sector (e.g. the soft drinks market, as opposed to the alcoholic beverages market) as well as geographically.

Normally, you will want to stipulate whether your distributor is to be non-exclusive, sole or exclusive. If you're going to use a sole distributor, make sure somewhere in the contract, probably in a schedule at the end, you set out which customers you want to reserve for yourself.

One of the biggest risks any supplier faces is a product liability claim.

“If one clause breaches competition regulations, the entire contract can be declared void.”

Make sure there is a strong warranty clause and that you limit your liability as far as possible. Bear in mind that what you can get away with under one law, you might not get away with under another. (Incidentally, you might also want to check you have adequate product liability insurance).

What do you expect from your distributor and what is expected of you? Set out each party's duties clearly.