CHECK IT OUT! THE DESCRIPTION ON CONSTRUCTION WORK CONTRACTS UNDER LAW NUMBER 2 OF 2017 CONCERNING CONSTRUCTION SERVICES

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CHECK IT OUT! THE DESCRIPTION ON CONSTRUCTION WORK CONTRACTS UNDER LAW NUMBER 2 OF 2017 CONCERNING CONSTRUCTION SERVICES

CHECK-IT-OUT!-THE-DESCRIPTION-ON-CONSTRUCTION-WORK-CONTRACTS-UNDER-LAW-NUMBER-2-OF-2017-CONCERNING-CONSTRUCTION-SERVICES

The Law Number 2 of 2017 concerning Construction Services has been issued some time ago (hereinafter shall be referred to as Construction Law 2017), in replace to Law Number 18 of 1999.  Under the new law, the provision on the construction work contracts has been gone through several revisions compared to the previous law.  Under the Construction Law 2017, the construction work contracts must be at least cover the following matters:

No
CLAUSE
DESCRIPTION

1

THE PARTIES

clearly stipulating the identity of the parties.

2

SCOPE OF WORKS

stipulating a clear and detailed description of the scope of works, value of works, unit price, lump sum, and limitation to the construction implementation period.

3

DEFECTS LIABILITY PERIOD

stipulating the construction implementation period and maintenance period which is the responsibility of the Service Provider.

4

EQUAL RIGHT AND OBLIGATION

stipulating the rights of the Service Users to acquire the result of the Construction Services and its obligations to meet the agreed terms, and the right of the Service Provider to acquire the information and service recompense also its service obligations in the implementation of the Construction Services.

5

USE OF CONSTRUCTION WORKERS

stipulating the obligation to work a certified construction worker.

6

PAYMENT METHOD

stipulating the provisions concerning the obligations of the Service User in making payment to the result of the Construction Services, including payment assurance.

7

BREACH OF CONTRACT

stipulating the provision concerning responsibility if any of the party fails to perform its obligations as provided in the agreement.

8

DISPUTE SETTLEMENT

stipulating provisions concerning procedures for dispute settlement due to any disagreement.

9

TERMINATION OF CONSTRUCTION WORK CONTRACTS

stipulating provisions concerning termination of Construction Work Contracts that are arising due to the inability of any party to fulfill its obligation(s).

10

FORCE MAJEURE

stipulating provisions concerning event that is arising beyond any wills and capability of any parties that cause damages for either party.

11

CONSTRUCTION DEFECTS

stipulating provisions concerning the obligations of the Service Provider and/or Service User on any Construction Defects and the period of liability on such Construction Defects.

12

WORKER’S PROTECTION

stipulating provisions concerning the obligations of the parties in the implementation of works health and safety and social security.

13

PROTECTION OF THIRD PARTY OTHER THAN THE PARTIES AND WORKERS

stipulating the obligations of the party in any event that cause damages or cause an accident and/or death.

14

ENVIRONMENT

stipulating obligations of the parties in complying with the environmental regulations.

15

WARRANTY

stipulating warranty on any arising risks and legal liability to another party in the implementation of the Construction Works or due to any Construction Defects.

16

CHOICE ON CONSTRUCTION DISPUTE RESOLUTIONS

stipulating the dispute settlement forum.

From the description of the clauses in the construction work contracts as mentioned above, the clause of protection to the third parties, warranties, and choice of dispute settlement are new provisions that were not regulated under the previous Law Number 18 of 1999.

Other than the clauses mentioned above, under some circumstances, a certain construction contract may require stipulating:

  1. for the construction planning services, may require to also insert a provision concerning intellectual property rights;
  2. for the Construction Services implementation, it may also insert a provision of Service Provider Subcontracting for materials, building components, and/or equipment to meet the prevailing standard; and
  3. engagement with foreign nationals/party, to insert the obligations to transfer of technology.

Furthermore, the drafting of construction work contracts to be made in Indonesia language, and if the contracts are made in engagement with foreign nationals/party, then it must be made in bilingual Indonesia language and English language.

HOW CAN SMART CONSULTING HELP YOU?
To ensure your business operation from the legal perspective, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailing laws and regulations and also still focus on reaching your company revenue target.

SMART Consulting is an Indonesian Corporate Legal Services firm which provides a one-stop legal solution. SMART has assisted Clients of national and multinational Companies who run Construction Services in Indonesia, both domestic or foreign entities. SMART consisting of professionals, experience and dynamic, our firm value will assist Clients in staying up-to-date with the newest Indonesian laws and regulations.

Contact Us Now to get your legal solution for your business goals in Indonesia, and still comply with the prevailing laws and regulations.
E: info@smartcolaw.com
H: +62821-1234-1235

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