Hello everyone, this is my first post here. This is a wonderful place for non techies like me to ask web business matters.

I am in the process of contracting a website developer/designer team to make a website for me. So far a friend (who is a web developer) has made the initial contacts. Now its time for me to finalize the matter. Before I do so I would like to know what sort of contract should I have with this gentleman. What clauses are essential for me to incorporate into the contract--performance clauses, payment, design/development flaws, after sales support to ensure the site performs after handing over.

Who is responsible if there are flaws in the website, how do I verify that the website is functioning.

I know I'm asking for everything, but essentially I want to know what binds us into a proper contract.
This is my first website and thus its my first step.
Also I need the website to be SEO friendly. What do i have to ask the developer do so that he designs and develops accordingly.