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Construction Contract Termination Letter

Construction Contract Termination Letter Template for Indonesia

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Key Requirements PROMPT example:

Construction Contract Termination Letter

"I need a Construction Contract Termination Letter for immediate termination due to contractor's repeated failure to meet project milestones and quality standards on our Jakarta office tower project, with the termination to take effect from March 15, 2025."

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Document background
The Construction Contract Termination Letter is a critical legal instrument used in Indonesian construction projects when one party needs to formally end a construction contract. This document is essential when dealing with serious breaches, force majeure events, or mutual agreement to terminate. It must comply with Indonesian legal requirements, particularly the Civil Code (KUHPerdata) and Law No. 2 of 2017 on Construction Services, while addressing practical aspects such as site handover, material custody, and financial settlements. The letter should clearly state the termination grounds, reference relevant contract clauses, and outline the next steps for all parties. It often triggers significant commercial and legal consequences, making it crucial for the document to be properly drafted and executed in accordance with both the contract terms and Indonesian law.
Suggested Sections

1. Letter Header and Date: Formal business letter header including sender's details, recipient's details, and date

2. Reference Line: Reference to the relevant construction contract including contract number, project name, and date of original agreement

3. Subject Line: Clear indication that this is a contract termination notice

4. Contract Identification: Specific details of the construction contract being terminated, including project location and scope

5. Termination Statement: Clear and unambiguous statement of termination, including effective date

6. Legal Basis: Reference to relevant contract clauses and/or legal provisions justifying the termination

7. Reason for Termination: Clear explanation of the grounds for termination with specific examples or incidents

8. Immediate Actions Required: List of immediate actions required from the recipient, including site handover procedures

9. Final Account Statement: Summary of financial position including outstanding payments or claims

10. Closing and Signature: Formal closing, signature block, and company stamp

Optional Sections

1. Breach Details: Detailed description of contract breaches - include when termination is due to contractor default

2. Cure Period Reference: Reference to previous cure notices and expired cure periods - include when termination follows a cure period

3. Dispute Resolution: Reference to dispute resolution procedures - include when disputes are ongoing or anticipated

4. Insurance and Bonds: Instructions regarding insurance policies and performance bonds - include when these need to be maintained or canceled

5. Confidentiality Reminder: Reminder of continuing confidentiality obligations - include for sensitive projects

6. Intellectual Property: Instructions regarding IP rights and transfer - include when IP is a significant concern

Suggested Schedules

1. Schedule of Outstanding Works: Detailed list of incomplete works and their status at termination

2. Financial Statement: Detailed breakdown of all financial matters including payments, claims, and retentions

3. Asset Inventory: List of materials, equipment, and documents to be handed over

4. Previous Notices: Copies of relevant previous notices, particularly cure notices or warning letters

5. Photographic Evidence: Documentation of site conditions at termination (if relevant to termination grounds)

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Contract
Termination Date
Effective Date
Original Agreement
Project
Site
Works
Outstanding Works
Contractor
Employer
Project Manager
Contract Price
Outstanding Payment
Final Account
Defects Liability Period
Force Majeure
Material Breach
Substantial Completion
Construction Documents
As-Built Drawings
Site Records
Performance Security
Retention Money
Cure Period
Termination Notice
Handover Protocol
Completion Certificate
Dispute Resolution Procedure
Governing Law
Working Day
Relevant Industries

Construction

Infrastructure

Real Estate Development

Industrial Development

Commercial Property

Residential Development

Mining

Oil and Gas

Public Infrastructure

Transportation

Healthcare Facilities

Education Facilities

Hospitality

Retail Development

Manufacturing

Relevant Teams

Legal

Operations

Project Management

Commercial

Construction

Contract Administration

Risk Management

Finance

Procurement

Executive Leadership

Site Operations

Quality Assurance

Relevant Roles

Project Director

Construction Manager

Legal Counsel

Contract Manager

Project Manager

Chief Executive Officer

Managing Director

Operations Director

Site Manager

Commercial Manager

Risk Manager

Procurement Manager

Chief Financial Officer

Legal Director

Company Secretary

Industries
Indonesian Civil Code (KUHPerdata): Provides the fundamental legal framework for contracts, including provisions for termination (Articles 1381-1456 on termination of contracts)
Law No. 2 of 2017 on Construction Services: The primary legislation governing construction services in Indonesia, including provisions for contract termination and dispute resolution in construction projects
Government Regulation No. 22 of 2020: Implementation regulation for Law No. 2 of 2017, providing detailed requirements for construction contracts including termination procedures
Minister of Public Works Regulation No. 07/PRT/M/2011: Standards for construction contracts and technical guidelines including provisions for contract termination in public works projects
Law No. 30 of 1999 on Arbitration and Alternative Dispute Resolution: Relevant for including dispute resolution mechanisms in the termination letter, as construction disputes often require arbitration
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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