LiFePO4 Distributor Agreement Checklist: 12 Clauses to Agree Before You Sign With a China Battery Supplier

For most importers, signing a distributorship with a battery supplier is a bigger commitment than the first purchase order. The agreement decides who may sell where, what happens if sales grow more slowly than planned, who owns the brand, and what you are left holding if the relationship ends. This checklist covers 12 clauses to settle in writing before you sign, with the questions to ask and the warning signs to watch for.

One reason the contract matters so much: the International Chamber of Commerce (ICC) notes that in most countries, distribution agreements are not governed by specific statutory provisions, so the parties must rely mainly on what they wrote down. Use this page to prepare for the negotiation, and have a lawyer in your market review the final text. This is general guidance as of 2026-10-29, not legal advice.

The 12 clauses at a glance

#	Clause	The question to settle	Warning sign
1	Exclusivity type	Exclusive, sole or non-exclusive, and what does each restrict?	“Exclusive” used without a definition
2	Territory and channels	Which countries, customer groups and online channels are covered?	Territory described only as a region name
3	Targets	Is the target a goal or a guaranteed minimum, and what is the remedy if it is missed?	Missed target leads straight to termination
4	Product range and changes	Which models, and how are cell, BMS or case changes notified?	No duty to notify changes
5	Pricing mechanism	How are prices set, how long are they valid, and what moves them?	“Prices subject to change” with no notice period
6	Brand and artwork	Who owns the trademark, artwork files and model names?	Supplier registers your brand in its own name
7	Documents per model	Which test summary, SDS and datasheet come with each model?	One test document offered for several models
8	Warranty and RMA	How are claims assessed, credited and returned?	Warranty terms left out of the agreement
9	Shipping and Incoterms	Who handles dangerous-goods packing, booking and documents?	Incoterm left blank
10	Confidentiality and non-compete	What is protected, for how long, and can you sell other brands?	Non-compete with no end date
11	Term, renewal and exit	What happens to stock, open orders and the brand at the end?	No buy-back or sell-off period
12	Disputes	Which law, which forum, which language?	No agreed forum, or a forum that cannot enforce in your country

1. Exclusive, sole or non-exclusive: what each actually restricts

These words are used loosely in emails, so define them in the contract. In common usage, an exclusive distributor is the only party allowed to sell the products in the territory: the supplier agrees not to appoint other distributors there and not to sell there directly. A sole distributor is the only appointed distributor, but the supplier keeps the right to sell directly to customers in the territory. A non-exclusive distributor has neither protection.

The ICC’s model distributorship contract, for example, is drafted as a sole distributorship for an exclusive importer-distributor and lists products, territory and customers in its first annex. Whichever template you start from, ask:

• Does the protection cover every model, or only named product lines?
• Can the supplier still sell to global accounts, OEMs or project buyers inside your territory?
• Is exclusivity conditional on targets, and can it be withdrawn without ending the whole agreement?

2. Territory and channels, including online and cross-border sales

A territory written as “Middle East” or “Europe” invites disputes. List the countries, and then list the customer groups (retailers, installers, OEMs, government tenders) and channels (your own web shop, marketplaces, wholesale platforms) that are included or reserved.

Online sales need particular care because a marketplace listing is visible across borders. Competition law may also limit what a supplier can restrict. In the EU, for example, Regulation (EU) 2022/720 treats a restriction that prevents a buyer from effectively using the internet to sell the goods as a hardcore restriction, and restricting unsolicited (passive) sales into another territory is generally not allowed. Other markets have their own rules, so check locally.

Questions to ask

• Which marketplaces may you list on, and who owns those listings if the agreement ends?
• Does the supplier or another distributor sell on the same marketplaces in your territory?
• How are orders from customers outside your territory handled?

3. Sales targets vs guaranteed minimum targets

A sales target is a planning figure. A guaranteed minimum target is a binding commitment with consequences. The difference matters more than the number itself.

In the ICC model contract, the guaranteed minimum target is an optional annex that applies only if the parties fill in a figure (an amount of money or of products per year). If the target is not reached, and the distributor cannot show that it was not responsible, the supplier may, on one month’s notice, terminate the contract, cancel the exclusivity, or reduce the territory or the product range. That right must be exercised in writing within two months after the end of the year. It is a useful reference point because it shows that remedies can be graded rather than all-or-nothing.

• Is the target measured by orders placed, orders paid or goods shipped?
• What happens if the supplier cannot deliver on time: does the shortfall still count against you?
• Is there a ramp-up period for the first year in a new market?
• Is the first remedy loss of exclusivity, rather than termination?

There is no universal “right” number. A realistic target comes from your market data, your channel plan and how long certification and listing take in your country.

4. Product range, model changes and change notification

Attach a list of the covered models to the agreement. For LiFePO4 batteries, also agree what counts as a change. A different cell supplier, BMS board, firmware, case or terminal can change the product your customers receive, and can make your test documents and marketplace listings out of date.

• Written notice before any change to cells, BMS, firmware, case or labelling.
• Your right to approve a sample before a changed model ships.
• Notice before a model is discontinued, with a chance to place a final order.

5. Pricing mechanism, validity and adjustment

The agreement does not need to fix prices, but it should fix how prices are set and changed. Agree the currency, how long a quotation or price list stays valid, what can trigger an adjustment (for example cell or raw-material costs, or exchange-rate moves beyond an agreed band), and how much notice you get. The ICC model handles discounts and conditions of supply in a separate annex, which keeps the main contract stable while commercial terms are updated.

Payment terms, sample orders and first-order sizes are usually negotiated alongside pricing. Our MOQ and sample order guide explains how to structure a first order before you commit to volume.

6. Brand, private label and artwork ownership

If you sell under your own brand, the agreement should say that you own it:

• The trademark is registered by you, in your name, in your territory.
• Editable artwork files (labels, manuals, packaging) are delivered to you and remain yours.
• The supplier may use your brand only to produce goods for you.
• Model names on the label match the model names on the test documents (see clause 7).

If you sell the supplier’s brand instead, agree how you may use its trademark and what happens to that right at the end of the agreement.

7. Documents per model: test summary, SDS, datasheet and certification

Documents are where distributors carry real obligations. Under the UN Model Regulations (2.9.4(g)), and in the US under 49 CFR 173.185(a)(3), manufacturers and subsequent distributors of lithium cells and batteries must make available a UN38.3 test summary as specified in paragraph 38.3.5 of the UN Manual of Tests and Criteria. As a distributor, you are part of that chain.

According to US PHMSA guidance, the test summary includes, among other things, the test laboratory, a unique test report number, the battery’s Wh rating, and the cell or battery model number. A new summary is needed when a different design requires re-testing. That is why a test document must match the exact model you sell.

Ask for, per model:

• UN38.3 test summary matching the model number.
• Safety data sheet (SDS).
• Datasheet with the full specification.
• For market certificates (for example IEC 62619, UL or CE-related documents): who arranges them, in whose name the report is issued, and who pays. The certificate verification guide on this site shows how to check a report before you rely on it.

8. Warranty, RMA and spare stock

Write the warranty and return process into the agreement or an annex; the ICC model uses separate annexes for after-sales service and warranty, and for stock of products and spare parts. Points to agree:

• When the warranty starts: at shipment from China, or at the sale to your customer.
• What evidence a claim needs: photos, serial numbers, BMS logs or app data.
• Who assesses a claim, and the remedy (replacement, credit or repair).
• Who pays return freight. Lithium batteries are dangerous goods, so returning a pack can cost more than replacing it locally.
• Which spare parts (BMS boards, cables, terminals) you hold locally.

Our LiFePO4 warranty terms guide for importers goes through these points in detail.

9. Dangerous-goods shipping and Incoterms

Lithium-ion batteries, including LiFePO4, ship as dangerous goods under UN3480 (Class 9). State the Incoterms rule and the named place in the agreement, for example FOB with a named Chinese port, or DAP with your warehouse. Incoterms 2020 has 11 rules; each one splits costs and risk differently. Then settle:

• Who books a forwarder that accepts lithium batteries?
• Who prepares the dangerous-goods paperwork, marks and labels?
• Who provides the test summary and SDS to the forwarder?

10. Confidentiality and non-compete

A confidentiality clause should name what is protected (prices, customer lists, designs, artwork), who may see it, and how long the duty lasts after the agreement ends. The ICC model includes a model confidentiality clause as an annex.

A non-compete clause stops you selling competing products. Agree its scope (all batteries, or only LiFePO4 in the same applications) and its duration. In the EU, Regulation (EU) 2022/720 does not exempt non-compete obligations that are indefinite or longer than five years, so an open-ended clause is a warning sign there.

11. Term, renewal and exit

Most of the cost of a failed distributorship shows up at the end. Agree before you sign:

• Initial term, renewal (automatic or by agreement) and notice period.
• Termination for cause, and a cure period for fixable breaches.
• Change of control: what happens if either company is sold (the ICC model has an annex for this).
• Remaining stock: buy-back, or a sell-off period during which you may keep selling.
• Open orders: completed, cancelled or transferred.
• Warranty support for units already sold to your customers.
• Brand, listings and customer data: who keeps them.

Some legal systems also give distributors a goodwill indemnity at termination; the ICC model has an optional annex for it. Ask your lawyer whether your country does.

12. Disputes: governing law, forum and language

Choose the governing law, and the forum: courts, or arbitration under named rules and a named seat. Arbitration is common in cross-border supply agreements partly because awards can be enforced in the many countries that are parties to the 1958 New York Convention, which include China. Agree the language of the contract and which version prevails if there are two.

How LJY approaches distributor programs

LJY Energy is a Shenzhen-based LiFePO4 battery supplier and OEM/ODM supply-chain coordinator, not a factory. For distributors and importers, we match battery models to the market, coordinate production with partner manufacturers, and prepare the document set per model. Territory, targets and pricing are discussed per market and written into the agreement; nothing on this page is an offer of exclusivity. Certification for your market is available and arranged per project, with certification and testing fees borne by the buyer.

See our wholesale distributor program for how a program is structured, or start with how to start a LiFePO4 battery distribution business if you are still planning.

FAQ

Will a battery supplier give exclusivity to a new distributor?

It depends on the supplier, the market and what both sides commit to. Exclusivity is often tied to targets and can be limited to certain models or channels. Get the definition and the conditions in writing. LJY discusses territory terms per market and does not promise exclusivity in advance.

What is a reasonable first-year sales target?

There is no universal figure. Base it on your market data, channel plan and the time needed for certification and listings. Agree how it is measured (orders placed, paid or shipped), allow a ramp-up period, and make loss of exclusivity the first remedy rather than termination.

Who owns the brand and artwork in a private-label deal?

You should. Register the trademark in your own name in your territory, receive editable artwork files, and limit the supplier to producing goods for you under that brand. Make sure the model names on labels match the test documents.

Can I sell on Amazon or other marketplaces in my territory?

Only if the agreement allows it, so name the marketplaces and agree who owns the listings. Competition rules can limit online restrictions; in the EU, a supplier generally cannot stop a distributor from effectively using the internet to sell. Marketplaces may also ask for a test summary that matches the exact model.

What happens to my stock if the agreement ends?

Only what the agreement says. Negotiate a buy-back or a sell-off period, how open orders are handled, and continued warranty support for units already sold, before you sign.

Do I need a lawyer to review a distributor agreement?

Yes. Distribution rules differ by country, and in many countries the contract itself carries most of the weight. Use this checklist to prepare, and have a lawyer in your market review the final text.