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The Option to Extend the Term of the Contract is a crucial document in Indonesian commercial practice, typically used when parties want to build flexibility into their contractual relationships while maintaining legal certainty. It's commonly employed in situations where businesses need to secure the possibility of continuing their contractual relationship beyond the initial term, without immediately committing to a longer duration. This document is particularly relevant in Indonesia's dynamic business environment, where it must comply with the Indonesian Civil Code and relevant commercial regulations. It includes essential elements such as extension conditions, notice requirements, price adjustment mechanisms, and performance criteria, all structured to ensure enforceability under Indonesian law. The document is frequently used in long-term commercial relationships, property leases, service agreements, and supply contracts, providing a clear framework for contract continuation while protecting both parties' interests.

1. Parties: Identification of all parties to the agreement, including their legal details and authorized representatives

2. Background: Context of the original contract and the reason for this extension option

3. Definitions: Key terms used in the document, including specific definitions related to the extension mechanism

4. Extension Option: Clear statement of the right to extend, including the number of extension periods available

5. Extension Period: Specification of the duration of each extension period

6. Exercise of Option: Process and requirements for exercising the extension option, including notice periods and formalities

7. Conditions Precedent: Conditions that must be met before the extension option can be exercised

8. Terms During Extension: Confirmation of which terms from the original contract continue to apply during the extension period

9. Commercial Terms for Extension Period: Any modifications to commercial terms (e.g., pricing, payment terms) during the extension period

10. Notices: Requirements for formal communications regarding the extension option

11. Governing Law and Jurisdiction: Confirmation that Indonesian law governs the agreement and jurisdiction details