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Preferred Vendor Agreement Template for Indonesia

A comprehensive legal agreement governed by Indonesian law that establishes a preferred vendor relationship between a company and a supplier. This document outlines preferential terms for the ongoing supply of goods or services, including pricing structures, service levels, ordering processes, and performance requirements. The agreement incorporates specific provisions to comply with Indonesian regulations, particularly the Job Creation Law and Trade Law, while establishing a framework for a long-term strategic sourcing relationship that may include preferential pricing, priority service, or exclusive arrangements.

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What is a Preferred Vendor Agreement?

The Preferred Vendor Agreement serves as a cornerstone document for companies operating in Indonesia who wish to establish strategic, long-term relationships with key suppliers. This document becomes relevant when a company identifies a reliable supplier with whom they want to formalize a preferential business relationship, typically involving regular or high-volume purchases. The agreement, governed by Indonesian law, particularly the Civil Code and Job Creation Law, sets out comprehensive terms including preferential pricing, service levels, and ordering procedures. It's commonly used when a company wants to secure favorable terms, ensure supply chain stability, or streamline procurement processes. The document typically includes provisions for compliance with Indonesian business regulations, anti-monopoly considerations, and specific industry requirements, while establishing the framework for a mutually beneficial business relationship that may include exclusive or semi-exclusive supply arrangements.

What sections should be included in a Preferred Vendor Agreement?

1. Parties: Identification of the vendor and the company, including full legal names, registration numbers, and registered addresses

2. Background: Context of the agreement, existing relationship between parties, and purpose of establishing a preferred vendor arrangement

3. Definitions: Detailed definitions of key terms used throughout the agreement, including 'Preferred Vendor Status', 'Services', 'Products', and 'Territory'

4. Appointment and Scope: Terms of appointment as preferred vendor, scope of products/services covered, and any territorial limitations

5. Term and Renewal: Duration of the agreement, conditions for renewal, and notice periods for extension

6. Ordering Process: Procedures for placing orders, acceptance, and fulfillment requirements

7. Pricing and Payment: Pricing structure, payment terms, invoicing requirements, and any volume-based discounts

8. Service Levels: Performance standards, delivery timeframes, and quality requirements

9. Warranties and Representations: Warranties regarding products/services, compliance with laws, and business conduct

10. Confidentiality: Protection of confidential information exchanged during the business relationship

11. Termination: Grounds for termination, notice requirements, and consequences of termination

12. Governing Law and Dispute Resolution: Specification of Indonesian law as governing law and dispute resolution mechanisms

What sections are optional to include in a Preferred Vendor Agreement?

1. Exclusivity Provisions: Used when the agreement includes exclusive supply arrangements for specific products/services or territories

2. Intellectual Property Rights: Include when the agreement involves licensed technology, branding, or IP transfers

3. Insurance Requirements: Detailed insurance obligations when high-value or high-risk products/services are involved

4. Compliance with Specific Regulations: Required when dealing with regulated industries or specific compliance requirements

5. Performance Incentives: Include when the agreement includes bonus structures or performance-based benefits

6. Business Continuity: Important for critical supply relationships requiring disaster recovery and business continuity planning

7. Environmental and Social Responsibility: Include when sustainability and social responsibility are key considerations

What schedules should be included in a Preferred Vendor Agreement?

1. Schedule 1 - Products and Services: Detailed list of products/services covered under the agreement, including specifications

2. Schedule 2 - Pricing Schedule: Comprehensive pricing details, including volume discounts and pricing review mechanisms

3. Schedule 3 - Service Level Agreement: Detailed performance metrics, KPIs, and measurement methodology

4. Schedule 4 - Ordering Procedures: Step-by-step procedures for order placement, acceptance, and fulfillment

5. Appendix A - Contact Details: Key contact information for both parties, including escalation procedures

6. Appendix B - Technical Specifications: Detailed technical requirements and standards for products/services

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Indonesia

Publisher

Genie AI

Document Type

Supplier Agreement

Cost

Free to use

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