Document background
The Preliminary Purchase Agreement is a crucial document in Indonesian commercial transactions that bridges the gap between initial negotiations and a final purchase agreement. It is typically used when parties have reached general understanding on key terms but require a formal framework for further negotiation and due diligence. The document outlines preliminary terms while providing certain binding obligations, particularly regarding confidentiality and exclusivity. Under Indonesian law, this agreement must comply with the Civil Code (KUH Perdata) and may require bilingual execution if foreign parties are involved. The agreement typically includes provisions for due diligence, price mechanisms, and conditions precedent to the final transaction, while clearly distinguishing between binding and non-binding provisions to avoid unintended legal obligations.
