1. Principles of Contract Law
Faculty of Law University of Indonesia
International Class Program
Depok, 18 February 2015
Faculty of Law-Universitas Indonesia

2. Today’s 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

3. 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

4. Sources of Obligations
From the Law ( 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

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

6. 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

7. Performance Issues
Faculty of Law-Universitas Indonesia

8. 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

9. Performance Issues: That’s Okay, You’re 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 debtor’s 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

10. Types of Obligations and Agreements
Conditional Obligation (Perikatan bersyarat) (Articles of the Civil Code);
Fixed-term Obligation (Perikatan dengan ketetapan waktu) (Articles of the Civil Code);
Voluntary Obligation (Perikatan mana suka) (Articles of the Civil Code);
Joint/Solidary Obligation (Perikatan tanggung menanggung) (Articles of the Civil Code);
Divisible and Indivisible Obligation (Articles of the Civil Code);
Obligation with a possibility to impose Punishment when not fulfilled (Articles of the Civil Code).
Agreements:
Sales/Purchase Agreement (Perjanjian jual beli);
Lease Agreement (Perjanjian sewa menyewa);
Donation/Gift Agreement (Perjanjian hibah);
Partnership/Association Agreement (Perjanjian persekutuan);
Assignment Agreement(Perjanjian penyuruhan);
Loan Agreement (Perjanjian pinjam meminjam);
Credit Agreement (Penanggungan hutang);
Employment Agreement (Perjanjian kerja); and
Settlement Agreement (Perjanjian perdamaian).
Faculty of Law-Universitas Indonesia

11. Termination of Agreement
Article of the Civil Code on Termination of Agreement:
Payment (Articles );
Offer of to pay in cash, followed by act of depositing (Articles );
Novation (pembaharuan hutang) (Articles );
Debt Setoff (perjumpaan hutang) (Articles );
Debt mixture (percampuran hutang) (Articles );
Debt Write off (penghapusan utang) (Articles );
Destruction of the object of debt/obligation (Articles );
Termination or cancellation (Articles );
A termination condition of a conditional obligation (Articles 1253, );
Expiration (Articles , Articles ).
Faculty of Law-Universitas Indonesia

12. Principles of Contract Law
Faculty of Law University of Indonesia
International Class Program
Depok, 18 February 2015
Faculty of Law-Universitas Indonesia