Overview the Agreement under the Law in Indonesia

The agreement is constitutes as a legal basis to the parties who made it to conduct certain subject and specified action, wherein this certain subject or specified action are not regulate or prohibit under the law in Indonesia. Moreover, Article 1338 Civil Code clearly stated that the agreement is applied for the parties as a Law, and cannot be revoked unless it is agreed.

Generally, the main legal basis to make an agreement in Indonesia is regulated under Civil Code, but there are certain regulation according to object and necessary to make the agreement in Indonesia. For example, Employment Agreement is made by company and employee which should be obey to the Laws No. 13 of 2003 regarding Employment Law, also the marriage agreement should be obey under Laws No. 1 of 1974 regarding Marriage.

Moreover, general term and conditions to make an agreement (any kind of agreement) is referred to Article 1320 of Civil Code, in which valid requirements for an agreement is regulated as follows:

1. Consent by both parties;
2. Capability to enter upon an agreement;
3. A certain subject;
4. A lawful purpose.

For the brief explanation regarding the requirements may be elaborated as follows:

1. Consent by both parties;

The agreement should be agreed voluntarily by the parties, which mean there is no pressure or intimidation during the process.

2. Capability to enter upon an agreement;

The agreement should be made by the party who has legal capacity, for example that the agreement cannot be made by the children who underage.

3. A certain subject;

The agreement must explain in detail about object as agreed by both parties, such as sale-purchase agreement, agreement for construction service, wherein the agreement will elaborate the certain thing which been agreed by both parties.

4. A lawful purpose.

The agreement cannot mention or regulated any things which prohibited under the law, such as the agreement for narcotics transaction, agreement for assassin. However, there is another interpretation related to this prohibition, in which the interpretation also explains that the agreement cannot regulate any kind violation against the laws, decency, and public order.

Violation against the agreement: request for cancellation/dissolution of agreement or breach of contract lawsuit.

The agreed contract/agreement by both parties should be conducted based on good will referred to terms and condition as stipulated under the agreement. However if one of party is not perform the agreement, then the injured party could claim another party into the court.

There are 2 method under civil law to solve this matter due to negligence the agreement, as follows:

1. Request for cancellation/dissolution of the agreement

Request for cancellation is a method to dissolve the agreement through District Court, then both parties will return into original state before the agreement is existed.

Request/petition to dissolve the agreement is regulated under article 1266-1267 of Civil Code, in which basically expressly stated if the agreement is not complied by one of party, as follows:

Article 1266 of Civil Code

The condition of dissolution of the agreement is always implied as to occur in mutual agreement, in the event one of the parties does not comply with his obligation. In such event, the agreement is not dissolved according to the law, but the dissolution must be requested through the court.

This request must be also submitted, even if the agreement should express the condition of dissolution due to non-compliance with the obligation. In the event the condition of dissolution is not expressed in the agreement, the judge is free, with due regard of the circumstances, at the defender’s request, to allow time to the defendant to comply as yet with his obligation, which time, however, may not exceed a period of one month.

Article 1267 of Civil Code

The party, toward whom the obligation has not been complied, has the option to force the other party to comply with the obligation or to demand the dissolution of the agreement, with compensation of cost, loss and interest.

Based on the said regulation, it is clearly stated that Civil Code provides legal access for injured party to file the case into the court for dissolution/cancellation of agreement. However, practically this method is rare because many people file the case related to the agreement with method breach of contract lawsuit.

2. Breach of Contract Lawsuit

One of party can be classified as comply the agreement if fulfill any terms and conditions as regulated under the agreement. Moreover, also regulated under Article 1234 of Civil Code regarding achievement of agreement, stated that the agreement is intended to provide something, to do something, or not to do something.

It is clear that the Civil Code give  limitation to define if one of party has breach against the agreement, then the other party can file the lawsuit regarding breach of contract against the negligent party.

author: wilopo husodo