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An IOU Agreement is a simple written promise to repay borrowed money or deliver goods, commonly used in Indonesian business dealings and personal transactions. It captures the basic details: who owes what to whom, when they'll pay it back, and any agreed interest rates.

Under Indonesian civil law, while IOUs aren't as formal as promissory notes (surat sanggup), they're still legally binding when properly documented with signatures, dates, and clear repayment terms. Many small businesses and individuals use IOUs for short-term loans, especially when traditional bank financing isn't practical or necessary. Just remember that for amounts over Rp 5 million, it's safer to use notarized agreements.

Use an IOU Agreement when lending money informally to friends, family, or business associates in Indonesia, especially for amounts under Rp 5 million. It's particularly useful for short-term loans where you need a basic paper trail but don't want the complexity of a formal loan contract.

These agreements work well for immediate cash needs, like covering unexpected business expenses or bridging temporary cash flow gaps. Many small business owners use IOUs when helping trusted suppliers with advance payments or when extending credit to regular customers. Just remember that for larger amounts or longer repayment terms, a notarized promissory note offers better legal protection.

• Basic Written IOU: The simplest form, documenting loan amount, repayment date, and signatures - perfect for personal loans under Rp 5 million
• Interest-Bearing IOU: Includes specific interest rates and payment schedules, commonly used between business associates
• Collateral-Backed IOU: Specifies assets securing the loan, offering additional protection for larger amounts
• Installment IOU: Details multiple payment dates and amounts, useful for longer-term repayment plans
• Witnessed IOU: Includes signatures from neutral third parties, adding credibility and evidence in case of disputes

• Small Business Owners: Use IOUs to manage short-term lending with suppliers or regular customers, especially for inventory financing
• Individual Lenders: Create basic IOUs when lending money to friends or family members, documenting terms clearly
• Borrowers: Sign IOUs to formalize their repayment commitments and show good faith in informal lending situations
• Witnesses: Add credibility to the agreement by observing and signing, particularly important for larger amounts
• Notaries: May authenticate IOUs for amounts exceeding Rp 5 million, though not legally required for smaller sums

• Basic Details: Gather full legal names, addresses, and ID numbers of both lender and borrower
• Loan Terms: Specify exact amount in Rupiah, repayment date, and any agreed interest rate
• Payment Method: Document how and where repayment will occur (bank transfer, cash, or other means)
• Signatures: Prepare for both parties to sign, date, and include their thumb prints for added validity
• Witnesses: Arrange for neutral third parties to witness the signing if the amount exceeds Rp 2 million
• Documentation: Make copies for all parties and consider taking photos of signed agreements

• Parties' Information: Full legal names, addresses, and identification numbers of lender and borrower
• Loan Details: Precise amount in Rupiah, written in both numbers and words
• Payment Terms: Clear repayment date, method, and any applicable interest rate
• Default Clause: Consequences of late or missed payments
• Dispute Resolution: Agreement to resolve conflicts through Indonesian courts
• Signature Block: Space for dated signatures, thumb prints, and witness signatures if needed
• Governing Law: Statement that Indonesian civil law governs the agreement

An IOU Agreement differs significantly from a Bond Purchase Agreement in several key ways. While both involve financial obligations, their formality, scope, and legal implications vary substantially under Indonesian law.

• Legal Formality: IOUs are informal documents for simple loans, while Bond Purchase Agreements are formal securities instruments requiring extensive documentation and regulatory compliance
• Amount Scale: IOUs typically handle smaller amounts under Rp 5 million, whereas Bond Purchase Agreements deal with large-scale corporate financing
• Regulatory Oversight: IOUs need minimal oversight, but Bond Purchase Agreements must comply with OJK regulations and capital market laws
• Transferability: IOUs are usually non-transferable personal promises, while bonds can be traded on secondary markets
• Documentation Required: IOUs need basic loan details and signatures, whereas Bond Purchase Agreements require extensive terms, conditions, and legal disclosures