A distributor would often be expected to use best efforts to sell and promote the products, provide an after-sales-maintenance service, retain sufficient and suitable premises, staff and facilities, to submit written reports showing the details of sales, stocks, outstanding orders and prospective business, to maintain an inventory, to maintain and properly insure adequate stocks to meet anticipated customer demand.

In addition, a distributor may be asked not to deal in any competing products without the consent of the supplier, not to actively seek customers from outside the territory for the products or to establish any branch or distribution depot outside the territory for the products.

With respect to the duties expected from you as supplier, it is common for a distributorship to include the following obligations: only to supply goods which are safe in relation to risk to personal property, to comply with specific legislation relating to the goods concerned, to maintain adequate defective products insurance, to supply know-how, technical and further support, training, promotional and other literature and know-how, models and samples.

Make sure the contract sets out what sales are to be achieved; break it down territory by territory, product line by product line if appropriate. Insist that the sales targets are to be increased yearly, and by a set percentage in the absence of agreement to the contrary.

“We recently caught and fixed an EU hard-core restriction.”

Protect your intellectual property rights (IPR) including copyright, rights in designs, patents, know-how and trademarks. For many companies, this is their most precious asset. Don't lose it by neglecting this clause in the contract. Otherwise, you could see your rights appropriated by your distributor.

It is advisable for IPR to be expressly licensed in the distribution agreement.  In this respect, it is important to address the following issues: which IPR may be used by the distributor, and any limitations on that use, whether the license is to be exclusive or non-exclusive, obligation to use trademarks, obligation to notify infringements within the territory and to co-operate in any proceedings that are necessary to protect those rights, and a prohibition on the distributor holding himself out as owner of intellectual property rights.