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Settlement Agreement Ex Gratia Payment Template for Indonesia

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Settlement Agreement Ex Gratia Payment

"I need a Settlement Agreement Ex Gratia Payment under Indonesian law for a voluntary payment of IDR 500,000,000 to a former consultant, with payment to be made by March 15, 2025, including strict confidentiality provisions and international wire transfer requirements."

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What is a Settlement Agreement Ex Gratia Payment?

The Settlement Agreement Ex Gratia Payment is a critical document used in Indonesian business practice when one party wishes to make a voluntary payment to another without admitting any liability or legal obligation. This type of agreement is commonly utilized in resolving potential disputes, employee separations, or business relationship terminations where parties seek a clean break without formal acknowledgment of claims. Under Indonesian law, particularly the Civil Code (KUHPer) and relevant commercial regulations, such agreements must carefully balance the voluntary nature of the payment with proper documentation for tax and regulatory compliance. The document must incorporate specific requirements from Bank Indonesia regarding payment mechanisms, especially for cross-border transactions, and address mandatory tax reporting obligations. It's essential to ensure proper execution under Indonesian law, including witness signatures where required, and appropriate corporate authorizations.

What sections should be included in a Settlement Agreement Ex Gratia Payment?

1. Parties: Identification of the parties making and receiving the ex gratia payment, including their legal details and authority to enter into the agreement

2. Background: Context of the settlement, explicitly stating the voluntary nature of the payment and that there is no admission of liability

3. Definitions: Key terms used in the agreement, including 'Ex Gratia Payment', 'Effective Date', and other relevant definitions

4. Ex Gratia Payment: Details of the payment amount, timing, method, and currency of payment, with clear statement of its voluntary nature

5. Tax Provisions: Treatment of taxes, including responsibility for payment and any withholding requirements under Indonesian law

6. Release and Waiver: Comprehensive release of claims and waiver of rights by the receiving party

7. Confidentiality: Obligations regarding confidentiality of the agreement and its terms

8. Representations and Warranties: Basic representations about authority to enter agreement and understanding of its terms

9. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction for disputes

10. Execution: Signature requirements and execution formalities under Indonesian law

What sections are optional to include in a Settlement Agreement Ex Gratia Payment?

1. Non-Admission of Liability: Separate section explicitly stating that payment does not constitute admission of liability (if not covered in background)

2. Return of Property: Required when settlement involves return of company property or documents

3. Non-Disparagement: Mutual obligations not to make negative statements, often included in sensitive cases

4. Future Cooperation: Provisions regarding cooperation in future matters, useful in business relationship contexts

5. Sanctions Compliance: Required for international payments or when parties are subject to international sanctions

6. Currency Conversion: Needed when payment involves foreign currency conversion

7. Bank Indonesia Reporting: Required for payments above certain thresholds or involving foreign currency

What schedules should be included in a Settlement Agreement Ex Gratia Payment?

1. Payment Details Schedule: Detailed breakdown of payment amount, timing, and bank account information

2. Form of Release: Standard form of release to be signed upon receipt of payment

3. Tax Calculation Schedule: Breakdown of tax implications and calculations if complex tax arrangements apply

4. Required Regulatory Forms: Any forms required by Bank Indonesia or other regulatory authorities

5. Related Agreements: List of any related agreements being settled or terminated

6. Authority Documents: Copies of corporate authorizations or powers of attorney

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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