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An Indemnification Agreement protects one party from financial losses caused by another party's actions or failures. In Indonesian business practice, these contracts often appear in construction projects, supplier relationships, and corporate transactions where companies want to manage their risk exposure.

Under Indonesian Civil Code Article 1820, these agreements create a binding promise to cover specific costs, damages, or legal expenses. The agreement spells out exactly what losses are covered, who pays for what, and how long the protection lasts. For example, a building contractor might indemnify a property owner against claims from injured workers or damage to neighboring buildings during construction.

Use an Indemnification Agreement when entering business relationships that carry significant risks in Indonesia. Common scenarios include hiring contractors for construction projects, forming partnerships with suppliers, or outsourcing critical business operations where one party's actions could result in losses for another.

The agreement becomes essential before starting high-stakes projects or signing major contracts. For example, manufacturing companies need it when working with equipment suppliers to protect against defective machinery claims. Property developers use it with contractors to guard against construction accidents. Indonesian law allows these agreements to transfer specific risks, making them valuable tools for protecting business interests and assets.

• Indemnity Contract: Basic one-way protection where one party agrees to cover specific losses of another
• Mutual Indemnification Agreement: Both parties protect each other, common in equal business partnerships
• Insurance Indemnification Agreement: Specifically designed for insurance-related risk transfer scenarios
• Guarantee And Indemnity Agreement: Combines payment guarantees with loss protection, often used in loans
• General Indemnity Agreement: Broad protection covering multiple scenarios and risks

• Business Owners & Corporations: Primary users who need protection from financial risks in commercial dealings, especially in construction, manufacturing, and trading
• Legal Counsel: Draft and review Indemnification Agreements to ensure compliance with Indonesian law and proper risk allocation
• Contractors & Suppliers: Often required to sign these agreements before starting work or providing services
• Insurance Companies: Use them alongside insurance policies to clarify coverage and risk transfer terms
• Property Developers: Require these agreements from construction companies and subcontractors to protect against project risks

• Party Details: Gather complete legal names, addresses, and registration numbers of all parties involved
• Risk Assessment: List specific risks and potential losses you want the agreement to cover
• Time Frame: Determine how long the indemnification protection should last
• Scope Definition: Outline exact activities, projects, or business relationships covered
• Financial Limits: Decide maximum coverage amounts and any insurance requirements
• Local Requirements: Check Indonesian Civil Code compliance and any industry-specific regulations
• Document Generation: Use our platform to create a legally-sound agreement that includes all required elements

• Party Identification: Full legal names, addresses, and registration details of both indemnifier and indemnitee
• Scope of Protection: Clear description of covered risks, losses, and excluded events
• Duration Clause: Specific start date and termination conditions under Indonesian law
• Payment Terms: Process and timing for claim submissions and reimbursements
• Force Majeure: Events that might excuse performance under Indonesian Civil Code
• Dispute Resolution: Choice of Indonesian court jurisdiction or arbitration procedures
• Governing Law: Express reference to Indonesian law and relevant regulations
• Signature Block: Space for authorized signatures, company seals, and witness details

People often confuse an Indemnification Agreement with an Affidavit and Indemnity Agreement, but they serve different purposes under Indonesian law. While both deal with risk protection, their scope and application differ significantly.

• Purpose: Indemnification Agreements focus purely on financial protection against future losses, while Affidavit and Indemnity Agreements combine sworn statements with protection promises
• Legal Structure: Standard indemnification is a two-party contract, whereas the affidavit version requires notarization and includes sworn testimony
• Timing: Indemnification Agreements typically cover future events, while Affidavit versions often address past actions or existing situations
• Proof Requirements: Regular indemnification needs only evidence of loss, but affidavit versions require proof of the sworn statements' truth