Owner Subcontractor Agreement Template for Indonesia

The Owner Subcontractor Agreement is a crucial document used in Indonesian construction projects where a project owner needs to directly engage a specialized subcontractor for specific aspects of construction work. This arrangement is particularly common in complex projects where specialized expertise is required or where the owner wishes to maintain direct control over certain project components. The agreement must comply with Indonesian construction laws, particularly Law No. 2 of 2017 on Construction Services and its implementing regulations, including requirements for construction business licensing, worker certification, and local content requirements. It typically includes detailed provisions for scope of work, payment mechanisms, quality standards, and dispute resolution procedures, all tailored to the Indonesian legal and business environment. The document is structured to protect both parties' interests while ensuring compliance with local regulatory requirements and industry standards.

1. Parties: Identification of the Owner and Subcontractor, including their legal details and authorized representatives

2. Background: Context of the agreement, including reference to the main contract and project details

3. Definitions: Defined terms used throughout the agreement, including technical and legal terminology

4. Scope of Work: Detailed description of the subcontracted works, including specifications and standards

5. Contract Price and Payment: Payment terms, including amount, method, schedule, and conditions for payment

6. Duration and Timeline: Project schedule, completion dates, and milestones

7. Obligations of the Subcontractor: Specific duties, responsibilities, and performance requirements

8. Owner's Rights and Obligations: Owner's responsibilities, including access, approvals, and coordination

9. Quality and Standards: Required quality standards, inspections, and acceptance criteria

10. Health, Safety and Environment: HSE requirements and compliance with regulations

11. Insurance and Indemnity: Required insurance coverage and indemnification provisions

12. Performance Security: Requirements for performance bonds or guarantees

13. Variations: Process for changes to scope, price, or schedule

14. Defects Liability: Warranty period and rectification of defects

15. Termination: Grounds and procedures for contract termination

16. Dispute Resolution: Process for resolving disputes, including mediation and arbitration

17. Governing Law: Application of Indonesian law and jurisdiction

18. General Provisions: Standard boilerplate clauses including notices, assignment, and severability