JBN Session on 5th April 2016 at Sapori Deli.

1. UnderstandingUnderstanding
business contractbusiness contractss
By : Lita Siregar & Bimo
Prasetio
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2. FormForm
A document containing written agreements entered into
two parties for their mutual benefit, especially in business
matters
PurposePurpose
Administrative data and evidence in the future
What is contractWhat is contract ??

3.  Identify the background, aims and purposes of each
party who want to enter into contract.
 Know the types of contract that will be used. For
example: Lease Agreement,Trade Contract, and so
on.
 Identify the identity of authorized parties
(individual, legal entity and its authorized proxy,
and so on)
 Agreed rights and obligations
ContractContract
PreparationPreparation

4. Attitudes before
drafting a
contract
KNOWTHE REGULATION
Get familiar with the regulations,
both general regulations and specific
regulations.
MUST BE EXAMINED:
 Who is the authorized party to sign
the contract?
 Is the transaction need General
Meeting of Shareholders (GMS)’s
approval?
 Is there any limitation on company’s
Articles of Association?
Keep calm
Health
physically and
mentally
Focus

5.  Must be prepared well
 Things to do before drafting a contract?
 What things that must be agreed?
 How to present the agreement properly?
 How if one party does not fulfill its need?
 How to terminate?
 Is there any addition?
GOOD CONTRACTGOOD CONTRACT

6. • ≠ do not use part of
speech
• Use plain sentence
• Use short paragraph
GOOD CONTRACTGOOD CONTRACT (2)(2)

7.  Plan your contract
 Start from the most
important information
 Use plain sentence
 Use short paragraph
 Use active voice
THINGS TO DOTHINGS TO DO

8.  Use long sentence just straight to the
point
 Use jargon
 Use passive voice
 Use outdated words
 Use legal jargon that is not understood
THINGS TO AVOID IN ATHINGS TO AVOID IN A
CONTRACTCONTRACT

9.  Contract Date
 Parties
 Consideration
 Definiton
CONTRACTCONTRACT
STRUCTURESTRUCTURE
 Agreement between two parties
 Failure possibilities
 Finalization/Execution
 Applicable law and law domicile
 Additional documents

10. A. Time terminology
 Be careful when using time terminology for example: “within”,
“since”, “after”, “when”
 Understand your position (things to do and not to do) when drafting
“time” clause
A. “and” versus “or ”
 Be careful in using “and” or “or”
 Identify your intention.You can use “both”, “between”, or “together”
A. Be careful when using “will”, “must”, “may”
 Always use “must” to bind something
CONTRACT DRAFTING STRATEGYCONTRACT DRAFTING STRATEGY(1)(1)

11. D. Other confusing words
 Be careful with upcoming interpretation
Example:
“This clause is applicable for local goods and supplier”
Is this clause also applicable for foreign supplier?
Proposed wording:
“This clause is only applicable for local goods and local supplier”
E. Settlement and Domicile
Choose law and domicile in where the assets of related party residing
CONTRACT DRAFTING STRATEGY (2)CONTRACT DRAFTING STRATEGY (2)

12.  Is my writing easy to understand?
 Is my writing suitable with my reader target?
 Is my writing legally accurate?
INTHE BEGINNING
Always plan your contract before drafting it
¬What is the most information needed by the reader?
¬Follow the process and logical transaction
¬Combine similar regulations
IMPORTANT SIGNS INIMPORTANT SIGNS IN
MAKING CONTRACTSMAKING CONTRACTS

13. 1) Choose clear
numbering
2) Use consistent words
3) Be careful with used
references.
NUMBERINGNUMBERING

14. Why putting “Definition”?
 To shorten the sentece
“Company Law” means Law No.40 of 2007 on Limited
Liability Company
 To eliminate ambiguity
 To create flexible meaning
“Sell” is including making an offer to sell
DEFINDEFINITIONITION

15.  Be consistent
 Do not put substantive provision
 Be careful with inclusive definition
 Avoid definition that just be used 1 (one) time
 Avoid the confusing or deviating definition
PRACTICAL GUIDE IN DRAFTINGPRACTICAL GUIDE IN DRAFTING
“Definition”“Definition”

16.  Use good example
 Never assume that the example is correct or new
 Re-examine the example, whether that example is
approrite with your needs
 Try to find out the background of the example
ARTICLE/CLAUSEARTICLE/CLAUSE
EXPLANATIONEXPLANATION

17. Read the Contract carefully
IMPORTANTIMPORTANT !!!!!!!!
Do not use or delete clauses
that you do not understand

18.  Use the primary law or regulation when drafting the
contract
 Start the drating by logical plan
 Separate and classify the ideas into different
clause/article
 Use simple term when drafting definition clauses
 Be careful when inputting example
 Re-examine the contract before printing it.
SUMMARYSUMMARY

19. Legal 4 UKM
Address:
Puri Imperium Office Plaza Unit G-9
Jl. Kuningan Madya Kav. 5-6
Jakarta Selatan, 12940, Indonesia
Hotline:
P : +6221 – 2947 5691
F : +6221 – 2947 5698
Email & Website:
E : info@smartcolaw.com
W : www.smartcolaw.com
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