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The Principal Agency Agreement is a crucial document used to establish formal commercial representation arrangements in Indonesia. This agreement is particularly important for businesses seeking to expand their presence in the Indonesian market through local representatives or agents. The document must comply with Indonesian civil law, commercial regulations, and specific agency-related legislation, including the Indonesian Civil Code (KUHPerdata) and relevant Ministry of Trade regulations. It encompasses essential elements such as appointment terms, territorial rights, commission structures, compliance requirements, and performance standards. The agreement is commonly used by foreign companies entering the Indonesian market, local businesses expanding their distribution networks, or any entity requiring formal representation through an agent. Special attention is given to regulatory compliance, particularly regarding foreign investment restrictions, agency registration requirements, and local business practices.

1. Parties: Identification of the Principal and Agent, including full legal names, registration details, and addresses

2. Background: Context of the agreement, business purpose, and relationship between the parties

3. Definitions: Definitions of key terms used throughout the agreement

4. Appointment and Scope: Formal appointment of the agent and detailed scope of authority

5. Territory: Geographic area where the agent is authorized to act

6. Duration and Termination: Term of the agreement, renewal provisions, and circumstances for termination

7. Rights and Obligations of the Agent: Detailed responsibilities, performance standards, and reporting requirements

8. Rights and Obligations of the Principal: Principal's commitments, support obligations, and information provisions

9. Compensation: Commission structure, payment terms, and calculation methods

10. Intellectual Property: Usage rights for trademarks, trade names, and other IP

11. Confidentiality: Protection of confidential information and trade secrets

12. Non-Competition: Restrictions on competing activities during and after the agreement

13. Compliance with Laws: Obligations to comply with Indonesian laws and regulations

14. Liability and Indemnification: Allocation of risks and responsibilities between parties

15. Force Majeure: Provisions for unforeseen circumstances preventing performance

16. Governing Law and Dispute Resolution: Choice of Indonesian law and dispute resolution mechanisms

17. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment