Starting out
What an export contract should say.
Most Indonesian orders run on a proforma invoice and a chat thread, which works until it does not. A contract does not prevent problems. It decides in advance who carries each of them, at a moment when both sides are still reasonable.
Twelve clauses.
This is a checklist of what has to be decided rather than a template. Anything substantial should be reviewed by a lawyer in a jurisdiction that matters to you.
- 01
Parties, in full legal names
Including the company form, matching the registration and the bank account. The check that catches the most common loss.
- 02
The specification, or a reference to it
Measurable terms and a sealed retained sample. Without this the rest of the contract has nothing to be measured against.
- 03
Quantity and tolerance
Including what happens on over or under shipment, which is routine on bulk agricultural goods.
- 04
Price, currency and validity
And what happens if the currency or the crop moves before production, which on agricultural goods is a real conversation.
- 05
Incoterm and named place
Chosen deliberately rather than defaulting to FOB.
- 06
Payment: percentage, trigger, account
And specifically that the balance falls due against a passed inspection rather than against shipment.
- 07
Inspection
Who, when, against what, at whose cost, and whether the result binds.
- 08
Failure
Rework and re-inspect, discount, or cancellation, and who pays for each. Deciding this while a failed container sits is the worst possible time.
- 09
Documents
Which certificates, issued by whom, stating what, and by when. Some cannot be produced retrospectively.
- 10
Delivery date and delay
Including what a holiday period does and what happens if the date moves.
- 11
Confidentiality of the specification
Where your design or formulation is the asset, and it frequently is.
- 12
Law and dispute resolution
Which law, which forum. The clause everybody skips and the only one that matters once the relationship has broken.
The three buyers leave out.
What happens on a failed inspection. Without it, a failed lot is a negotiation with somebody holding your goods and your deposit.
Which law and which forum. It feels adversarial to raise at the start and it is the only clause that operates when everything else has stopped working.
Confidentiality on the specification. In craft and private label especially, the thing you developed can appear on somebody else's stand at a trade fair, and without a clause there is nothing to point at.
Why a proforma is not enough.
A proforma states what will be supplied at what price. It says nothing about inspection, failure, delay, confidentiality or dispute. That is not a criticism of proformas, it is what they are for.
For a small first order many buyers work from a proforma and a purchase order and accept the risk knowingly, which is a reasonable commercial decision. The mistake is being on the tenth container of a growing programme and still working that way.
Questions buyers ask.
Will an Indonesian supplier sign a long contract?
A large exporter, routinely. A small workshop, sometimes reluctantly, because a long English document is intimidating and often genuinely hard to read. Short, specific and translated goes further than comprehensive, and the clauses above can be short.
Is a contract enforceable across borders?
That is a legal question with a jurisdiction-specific answer, and it is worth asking a lawyer rather than an agent. What a contract reliably does even without enforcement is settle expectations in advance, which prevents most disputes from becoming disputes.
What is the single most valuable clause?
Payment against a passed inspection. It is the one that changes behaviour before anything goes wrong, and it is the one a buyer can negotiate on a first order without a lawyer being involved.
Read next.
Paying an Indonesian supplier
T/T, letters of credit and documentary collection, what each actually protects, and the five rules that stop a deposit disappearing.
Writing a specification suppliers can price
The document that decides what arrives. What belongs in it, what has to be measurable, and the words that cause disputes.
Inspecting before it sails
The five moments worth inspecting, what a report has to contain, and the mistake that makes an inspection worthless.
What a proforma invoice is for
The document a deposit is paid against and a credit is drafted from. What it must contain and what it does not prove.
Pre-shipment inspection
An independent check before the container is sealed. What it covers, what it cannot, and why it costs a fraction of the problem it prevents.
Letter of credit
A bank promise to pay when named documents are presented exactly as specified. What it protects and what it very deliberately does not.
Protecting a design or brand
An NDA with a workshop is worth less than buyers think. What registration does and does not do.
Weights and shortfall
Goods weighed at origin and at destination rarely match. Which gaps are normal and which are a claim.
Credits and refunds
A refund is rare, a credit against the next order is normal. How settlements actually work.
Onboarding a supplier
Everything to collect before the first order, in the order it is worth collecting it.
Rework at origin
A failed inspection is a decision. Which problems can be reworked and which end the shipment.
Sourcing from Indonesia?
Tell us the product, the quantity and the destination. We come back with what it involves before anyone talks about money.