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A Contingency Contract sets up a conditional business agreement that only takes effect when specific events or conditions happen. Under Indonesian law, these contracts help businesses manage uncertainty by spelling out exactly what each party must do if certain triggers occur - like reaching sales targets, getting government permits, or completing project milestones.

These agreements are especially valuable in Indonesia's mining, construction, and export sectors, where success often depends on external factors. The Civil Code (KUHPerdata) recognizes contingency contracts as legally binding tools for risk management, letting companies plan ahead while protecting both parties' interests until agreed conditions are met.

Use a Contingency Contract when your business deal depends heavily on future events or conditions in Indonesia. This agreement works perfectly for construction projects awaiting permits, mining ventures requiring environmental clearances, or export deals contingent on quota approvals. It helps protect both parties by clearly defining what happens when specific conditions are met.

Many Indonesian businesses use these contracts when entering joint ventures, launching new products, or scaling operations across provinces. They're particularly valuable when dealing with regulatory requirements, performance targets, or milestone-based payments. The agreement creates a clear roadmap for moving forward once predetermined conditions are satisfied, reducing uncertainty and potential disputes.

• Performance-Based Contingency: Used in sales agreements and commission structures, triggering payments or actions when specific revenue or performance targets are reached
• Regulatory Contingency: Common in Indonesian resource sectors, activating business arrangements only after obtaining specific permits or licenses
• Project Milestone Contingency: Popular in construction and development projects, releasing funds or obligations based on completion of defined project stages
• Environmental Compliance Contingency: Essential for mining and industrial projects, making agreements effective only after environmental impact assessments and approvals
• Financial Event Contingency: Links contract activation to specific financial conditions like funding approval, IPO completion, or achieving profitability metrics

• Business Owners: Rely on Contingency Contracts to protect their interests when expanding operations or entering new markets across Indonesia's provinces
• Corporate Legal Teams: Draft and review these agreements to ensure compliance with Indonesian law while protecting company interests
• Project Developers: Use these contracts when managing large-scale construction or infrastructure projects dependent on specific conditions
• Investment Partners: Deploy these agreements to structure deals with performance-based elements or regulatory requirements
• Government Agencies: Review and approve these contracts when they involve regulated industries or require specific permits

• Identify Triggers: List all specific conditions that will activate the contract obligations under Indonesian law
• Gather Party Details: Document complete legal names, registration numbers, and authorized representatives of all involved parties
• Define Timelines: Establish clear deadlines for meeting conditions and consequences if conditions aren't met
• Outline Obligations: Detail each party's responsibilities before and after contingency conditions are met
• Documentation Requirements: Specify what proof or certification is needed to verify conditions have been satisfied
• Use Our Platform: Generate a legally-sound document that includes all mandatory elements and minimizes drafting errors

• Party Information: Complete legal names, addresses, and registration numbers of all contracting parties
• Contingency Conditions: Clear description of triggering events or circumstances that activate the contract
• Performance Terms: Detailed obligations of each party before and after conditions are met
• Timeline Provisions: Specific deadlines for meeting conditions and contract duration
• Verification Method: Process for confirming when conditions have been satisfied
• Governing Law: Express statement that Indonesian law governs the agreement
• Dispute Resolution: Clear procedure for handling disagreements under Indonesian jurisdiction
• Termination Rights: Circumstances allowing contract cancellation if conditions remain unmet

A Contingency Contract differs significantly from an Agreement Contract in several key aspects under Indonesian law. While both are legally binding documents, their core purposes and activation triggers set them apart.

• Activation Timing: Contingency Contracts only become active when specific conditions are met, while Agreement Contracts take effect immediately upon signing
• Risk Management: Contingency Contracts specifically handle uncertain future events, whereas Agreement Contracts typically govern immediate, certain obligations
• Payment Structure: In Contingency Contracts, financial obligations often depend on specific outcomes; Agreement Contracts usually have fixed payment terms
• Enforcement Mechanism: Contingency Contracts require proof that conditions were met before enforcement, while Agreement Contracts are immediately enforceable
• Termination Rules: Contingency Contracts may automatically terminate if conditions aren't met within specified timeframes; Agreement Contracts typically require specific breach or mutual consent