A Letter of Intent Distribution Agreement is commonly used in Indonesian business practice as a preliminary step before entering into a full distribution agreement. This document is particularly important in Indonesia's complex regulatory environment, where distribution arrangements must comply with specific local content requirements, trading regulations, and investment laws. It typically outlines the proposed structure of the distribution relationship, including territory rights, product scope, and key commercial terms, while clearly distinguishing between binding and non-binding provisions. The document serves as a roadmap for further negotiations and due diligence, often required by Indonesian business partners as a show of serious intent before committing resources to detailed negotiations. It must be carefully drafted to comply with Indonesian Civil Code requirements and relevant trade regulations, particularly Minister of Trade Regulation No. 22/M-DAG/PER/3/2016 regarding distribution arrangements.
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1. Parties: Full legal names and addresses of the potential distributor and the principal company
2. Background: Context of the proposed distribution relationship, including brief description of both businesses and their objectives
3. Definitions: Key terms used in the letter that require specific definition for clarity
4. Purpose: Clear statement of intent to enter into a distribution agreement and the general scope of the proposed arrangement
5. Territory: Proposed geographical area where distribution rights will be granted
6. Products: Initial list or description of products to be covered by the distribution agreement
7. Key Commercial Terms: Outline of essential business terms including exclusivity status, target markets, and general pricing principles
8. Due Diligence: Framework for information exchange and evaluation process
9. Timeline: Proposed schedule for negotiation and execution of the definitive agreement
10. Binding Terms: Specific provisions that are intended to be legally binding (typically confidentiality, exclusivity during negotiation, and governing law)
11. Non-Binding Nature: Clear statement that the LOI is generally non-binding except for specified provisions
12. Execution: Signature blocks and execution details
1. Exclusivity Period: Used when parties want to establish a period of exclusive negotiation, preventing the principal from engaging with other potential distributors
2. Cost Allocation: Include when parties need to specify who bears the costs of negotiation and due diligence
3. Deposit Terms: Required if any initial deposit or security is to be provided during the negotiation phase
4. Regulatory Compliance: Include when specific regulatory approvals or licenses will be required for the distribution arrangement
5. Break Fee: Used when parties want to establish compensation if one party withdraws from negotiations without justified cause
6. Interim Operating Procedures: Include if parties plan to begin limited operations or testing during the negotiation period
1. Initial Product List: Preliminary list of products intended to be covered by the distribution agreement
2. Territory Map: Visual representation of the proposed distribution territory
3. Timeline Schedule: Detailed timeline for negotiation, due diligence, and completion of the definitive agreement
4. Key Commercial Terms Sheet: Summary of principal commercial terms to be included in the final agreement
Relevant legal definitions
Clauses
Relevant Industries
Consumer Goods
Electronics and Technology
Automotive
Food and Beverage
Pharmaceuticals
Industrial Products
Fashion and Apparel
Construction Materials
Healthcare Products
Agricultural Products
Telecommunications
Chemical Products
Home Appliances
Cosmetics and Personal Care
Relevant Teams
Legal
Commercial
Business Development
Sales
Distribution
Supply Chain
Compliance
International Trade
Corporate Affairs
Strategy
Operations
Partner Relations
Relevant Roles
Chief Executive Officer
Commercial Director
Business Development Manager
Sales Director
Distribution Manager
Legal Counsel
Contract Manager
Chief Operating Officer
Regional Manager
Country Manager
Supply Chain Manager
Compliance Officer
Strategy Director
Partnership Manager
International Trade Manager
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