Construction Contract Termination Agreement Template for Indonesia

The Construction Contract Termination Agreement is a crucial document used when parties need to formally end their construction contractual relationship in Indonesia, whether by mutual agreement or due to specific circumstances such as breach, force majeure, or project abandonment. It is essential for properly documenting the termination process, ensuring compliance with Indonesian construction laws and regulations, particularly Law No. 2 of 2017 on Construction Services and its implementing regulations. The agreement covers critical aspects including financial settlements, work handover procedures, treatment of materials and equipment, ongoing obligations, and mutual releases. It helps minimize potential disputes by clearly defining each party's rights and obligations during and after the termination process, while ensuring proper project closure and compliance with local legal requirements.

1. Parties: Identification of all parties to the termination agreement, including their complete legal names, registration numbers, and addresses

2. Background: Recitals describing the original construction contract, key events leading to termination, and the parties' intention to terminate

3. Definitions: Definitions of key terms used in the agreement, including references to terms from the original construction contract where relevant

4. Termination: Clear statement of the termination, its effective date, and the grounds for termination under the original contract or by mutual agreement

5. Project Status and Handover: Details of the current status of works, handover process for completed works, site clearance requirements, and return of materials/equipment

6. Financial Settlement: Terms for final payment, including payment for completed works, return of advance payments, release of retention monies, and handling of outstanding claims

7. Materials and Equipment: Provisions for handling construction materials, equipment on site, and temporary works

8. Documentation and Intellectual Property: Requirements for handover of project documentation, as-built drawings, and treatment of intellectual property rights

9. Warranties and Defects: Handling of existing warranties, defects liability period for completed works, and ongoing maintenance obligations

10. Release and Waiver: Mutual release of claims and obligations, except for those specifically preserved in the termination agreement

11. Confidentiality: Obligations regarding confidential information and public announcements about the termination

12. Governing Law and Dispute Resolution: Confirmation of Indonesian law as governing law and dispute resolution mechanisms

13. General Provisions: Standard boilerplate clauses including notices, entire agreement, and severability