The First-Tier Contractual-Evidentiary Gap in Trust-Based Supply Relationships Without Comprehensive Written Contracts

Abstract

Supply chain liability studies have predominantly focused on accountability problems arising from complex multi-tier structures. However, liability uncertainty may also emerge within direct first-tier relationships when transactions rely on trust-based practices without comprehensive written contracts. This study examines how contractual uncertainty, evidentiary limitations, and risk allocation problems develop within a first-tier supply relationship in an Indonesian paper-conversion company. Using an empirical socio-legal case study, the research investigates PT Artaniaga Megah Gemilang (PT AMG). Primary data were obtained through two semi-structured interviews with the company director on 10 and 30 July 2026, complemented by purchase orders, internal business correspondence, and relevant Indonesian civil law provisions. The findings indicate that PT AMG’s business relationships remain legally valid despite the absence of comprehensive written contracts, as demonstrated by agreement, continuous performance, and transactional consistency. Nevertheless, limited documentation creates difficulties in establishing contractual obligations, proving modifications, allocating risks, and determining responsibility when disputes arise. Based on this case, the study proposes the concept of the First-Tier Contractual-Evidentiary Gap, referring to an operationally established relationship lacking sufficient contractual and evidentiary mechanisms to clarify obligations, liability, and risk allocation. Furthermore, the study develops the Risk-Based Relational Contract (RBRC) framework, integrating relational flexibility with minimum mechanisms for documentation, adaptation, and risk governance. RBRC seeks to preserve trust while strengthening legal certainty.