Business contracts generally refer to the provisions of the Civil Code, which regulates in detail about the agreement, requirements of the agreement, and the legal consequences of cancellation of agreement.
The agreement contains the rights and obligations of the parties, where one party gives a right to another party. An agreement must fulfill the requirements as stated by Article 1320 of the Civil Code, as follows:
- mutual consent of those who bind themselves;
- the ability to make an engagement;
- a certain subject matter;
- the object of agreement is not forbidden by law.
The agreement must be made based on the awareness and consent of the parties, in the other hands, it must not be made on the basis of coercion or pressure. Furthermore, the parties are legally competent, in the sense that the agreement may not be made for underage, anybody who lost their memories (insanity), people who are under ability.
In addition, the agreement must not be about something that is prohibited by law, such as the sale and purchase of narcotics, gambling, murder, etc. the legal consequences of this the agreement is null and void.
If one of party cannot perform the agreement, then the other party has a right to declare default and take legal proceedings to file a lawsuit in the relevant district court or arbitration institution (if agreed). The injured party has the right to claim compensation for defaults committed by the negligent party.
However, in its development, the settlement of the business contracts dispute was proceed through a criminal investigation by reporting the negligent parties to the police agency on the basis of fraud (378 Criminal Code) and embezzlement (372 Criminal Code). This settlement is expected to have a deterrent effect on the negligent parties and also a settlement by both parties during investigations or examination by police.
Although basically the settlement process is not possible based on the provisions of criminal law, the police have other considerations if the negligent party is able to fulfill the agreement (obligation) to other party (injured party), then based on the settlement by both parties, the police held examination meeting related to the case to stop the process of investigation because there has been a civil settlement among the parties.
There are some examples of cases that have occurred in connection with business contracts that lead to criminal proceedings, as stated in the Supreme Court Decision No. 933K/Pid/1994, which regarding a loan agreement which the processes of payment is using a blank check or cannot paid by the bank because of insufficient funds. In the case of the blank check, it is legally proved that there has been a criminal offense as stipulated in Article 378 Criminal Code regarding fraud.
Furthermore, in the Jurisprudence of Supreme Court Verdict No. 411K/Pid/1992, where the case is about sale and purchase agreement for land between a buyer and an marketer (dealer), but then the marketer does not conduct the obligations according to the agreement even though the buyer has paid some money to the marketer to process the sale and purchase of land to the seller. In the first instance of court and the appeal process sentenced the marketer in prison, and then at the Supreme Court stage was canceled because the case was not a criminal case but a civil (commercial) case.
Another case for business contracts is in the Supreme Court Jurisprudence No. 449K/Pid/2001, regarding the timber purchase agreement where the buyer has paid an advance amount for the transaction, then the timber is only partially sent the timber to buyer. The case is proceeding under criminal investigation, where the First Stage of Court and Appeal Stage punish the imprisonment against the seller. However, at the Supreme Court level overturned the decision of the two court levels and further stated that the case was a civil (commercial) case.
Referring to the opinion of Dr. Yahman, SH, MH, in his book the characteristics of default and fraud (the first edition of 2014), explained that to determine whether the act was intentional or not must be considered the previous act (ante factum) and the act afterwards (post factum). For example doing a contract for buying and selling wood even though the seller may not have wood, then the act does not feel enough to bring justice if declared as default, the seller with deception/lies that they have wood so that the buyer deal the agreement.
Based on personal experience, the case of default is also similar that was handled in Criminal case No. 403/Pid/2020/PN.JktUtr, where the case about a loan agreement to borrow money for a project and in the agreement also explicitly regulated the profit sharing and methods of payment by check as collateral. But then the project was canceled because of the surge in materials that could cause losses if the project was performed.
The Prosecutor’s Office explained that the main evidence for the case was a blank check given by the debtor to creditor as loan payment, so that the criminal classification had been fulfilled, as stated by Article 378 or 372 of Criminal Code. As of this article is published, the case is being examined at the First Level Court, while the debtor has been detained since the investigation level at the Police.
author : wilopo husodo