Principles of Contract Law

Faculty of Law University of Indonesia

International Class Program

Depok, 18 February 2015

Faculty of Law-Universitas
Indonesia
 Todays Roadmap
Definitions and General Terms
Sources of Obligations
The difference between Agreements and Obligations
Validity of an Agreement
Breach of Contract and Force Majeure
Types of Obligations and Agreements
Termination of an Agreement

Faculty of Law-Universitas Indonesia

 Definitions and General
Terms
Obligations (Perikatan)
a legal relationship (pertaining to goods or wealth)
between two people/parties, which gives rights to one of the parties
to claim certain goods from the other, a claim that must be fulfilled
by the other party

Some general terms:

Creditor
Debtor
Performance (prestasi) [1234 Civil Code]
How many are there?

Faculty of Law-Universitas Indonesia

 Sources of Obligations
From the Law (1352-1380 Civil Code)
Purely from what the law says
Obligations stemming from familial relationships
See Book I of the Civil Code
From actions that a person committed:
Something that is permitted
Something that is against the law (onrechtmatige daad)
Article 1365 Civil Code

From a valid Agreement

What makes an Agreement valid?

Obligation has a wider understanding and a more abstract

concept than agreement.
If you see from the above sources, obligations (or the legal relationship
that it entails) can be borne from not just an agreement

Faculty of Law-Universitas Indonesia

 What Makes a Valid
Agreement?
Legal Capacity of the Parties A definite object
Contractual age You can determine the object
No guardianship You can trade the object
Authorized
Contract must not contravene:
Consent by free will to make the The law
contract Morals/Decency
No duress Public Norms
No misrepresentation/fraud
No mistake

Faculty of Law-
Universitas Indonesia
 What Makes a Valid
Agreement?
Validity of an agreement: Articles 1320 to 1337 Civil
Code

Two classifications of the requirements:

Subjective requirements
Objective requirements

What are the consequences of failure to fulfill the

requirements?

Faculty of Law-Universitas Indonesia

Performance Issues

Faculty of Law-Universitas Indonesia

 Performance Issues
Breach of Contract/Default (Wanprestasi)
Debtor fails to perform under the contract
Entitled to Remedies:
Specific Performance
Damages
Transfer of Risk
Damages [1244, 1245, 1246 Civil Code]:
Expenses
Losses
Interest
Notification of Breach/Default is important (Ingebreke Stelling Somasi) [1243,1238
Civil Code]
Duty to pay damages starts from this Notification
For fixed-term Obligations, no Notification is required

Faculty of Law-Universitas Indonesia

 Performance Issues: Thats
Okay, Youre Probably Tired
Breach of Contract/Default is excused when there is a Force Majeure or Overmacht
[1244, 1245, 1444 Civil Code]

3 elements for a valid Force Majeure claim:

A performance that is not fulfilled
The cause of the non-performance is beyond the debtors actions/mistake
The cause was not foreseeable and cannot be placed on the debtor.

Consequences of a Force Majeure:

Creditor cannot claim for specific performance
Creditor cannot establish that the debtor breached
The agreement cannot be severed, the obligation between them will only disappear
temporarily.

Faculty of Law-Universitas Indonesia

 Types of Obligations and
Agreements
Obligations: Agreements:
1. Conditional Obligation (Perikatan 1. Sales/Purchase Agreement
bersyarat) (Articles 1253-1267 of the (Perjanjian jual beli);
Civil Code); 2. Lease Agreement (Perjanjian sewa
menyewa);
2. Fixed-term Obligation (Perikatan
dengan ketetapan waktu) (Articles 1268- 3. Donation/Gift Agreement (Perjanjian
1271 of the Civil Code); hibah);
4. Partnership/Association Agreement
3. Voluntary Obligation (Perikatan mana (Perjanjian persekutuan);
suka) (Articles 1272-1277 of the Civil
Code); 5. Assignment Agreement(Perjanjian
penyuruhan);
4. Joint/Solidary Obligation (Perikatan 6. Loan Agreement (Perjanjian pinjam
tanggung menanggung) (Articles 1278- meminjam);
1295 of the Civil Code);
7. Credit Agreement (Penanggungan
5. Divisible and Indivisible Obligation hutang);
(Articles 1296-1303 of the Civil Code); 8. Employment Agreement (Perjanjian
6. Obligation with a possibility to impose kerja); and
Punishment when not fulfilled 9. Settlement Agreement (Perjanjian
(Articles 1312-1340 of the Civil Code). perdamaian).

Faculty of Law-Universitas Indonesia

 Termination of Agreement
Article 1381 of the Civil Code on Termination of Agreement:
1. Payment (Articles 1382-1403);
2. Offer of to pay in cash, followed by act of depositing (Articles 1404-1412);
3. Novation (pembaharuan hutang) (Articles 1413-1424);
4. Debt Setoff (perjumpaan hutang) (Articles 1425-1435);
5. Debt mixture (percampuran hutang) (Articles 1436-1437);
6. Debt Write off (penghapusan utang) (Articles 1438-1443);
7. Destruction of the object of debt/obligation (Articles 1444-1445);
8. Termination or cancellation (Articles 1446-1456);
9. A termination condition of a conditional obligation (Articles 1253,
1265-1267);
10. Expiration (Articles 1946-1962, Articles 1967-1993).

Faculty of Law-Universitas Indonesia

Principles of Contract Law

Faculty of Law University of Indonesia

International Class Program

Depok, 18 February 2015

Faculty of Law-Universitas Indonesia