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The Subcontractor Agreement (Construction) is a crucial document used in Indonesian construction projects when a main contractor needs to delegate specific portions of construction work to specialized contractors. This agreement is essential for projects requiring specialized expertise or additional workforce capacity, and must comply with Indonesian Construction Services Law No. 2 of 2017 and its implementing regulations. The document establishes the legal framework for the working relationship, including detailed specifications of work scope, payment mechanisms, quality standards, and compliance requirements. It's particularly important in Indonesia's growing construction sector, where proper risk allocation and clear delineation of responsibilities are essential for project success. The agreement typically includes provisions for local content requirements, worker certification, and specific Indonesian regulatory compliance, while also addressing project-specific technical requirements and commercial terms.

1. Parties: Identification of the main contractor and subcontractor, including their respective registration and license details

2. Background: Context of the main contract, project details, and the basis for the subcontracting arrangement

3. Definitions: Key terms used throughout the agreement, including technical construction terms and project-specific definitions

4. Scope of Work: Detailed description of the subcontractor's obligations, deliverables, and work specifications

5. Contract Price and Payment Terms: Payment amount, schedule, retention, and payment conditions

6. Timeline and Completion: Project schedule, milestones, completion criteria, and delay consequences

7. Performance Standards: Quality requirements, workmanship standards, and compliance with Indonesian construction regulations

8. Safety and Environmental Requirements: Compliance with Indonesian health, safety, and environmental regulations

9. Materials and Equipment: Responsibilities for supply, quality standards, and storage of materials

10. Workforce Requirements: Labor compliance, worker certification, and minimum skill requirements

11. Warranties and Defects Liability: Warranty period, defect rectification obligations, and quality guarantees

12. Insurance and Indemnities: Required insurance coverage and mutual indemnification provisions

13. Variations and Changes: Process for handling changes to scope, pricing, or timeline

14. Termination: Grounds for termination, procedures, and consequences

15. Dispute Resolution: Dispute resolution process, governing law, and jurisdiction

16. General Provisions: Standard boilerplate clauses including notices, assignment, and entire agreement