In doing business or even in carrying out daily work routines, KH pals may often be asked to make or agree to an agreement. But, do you know what are the legal requirements of an agreement in the eyes of Indonesian law? Yes, based on the Civil Code (KUHPer) which applies as the basis of agreement law in Indonesia, basically the parties are given the freedom to determine the contents of the agreed agreement. However, this freedom does not eliminate the parties’ obligation to comply with the applicable provisions. Where the parties involved need to pay attention to whether the agreement made or approved has fulfilled the valid requirements of the agreement. So, what are the conditions for the validity of an agreement that must be met when making an agreement letter? Below we will describe in detail about the conditions that make an agreement considered valid in the eyes of applicable law. Listen to the end, yes!
What is a Covenant?
Before discussing further about the legal terms of the agreement, it is first necessary to know what the definition of an agreement is. According to Article 1313 of the Civil Code, an agreement is defined as an act by which one or more people bind themselves to one or more people. Subekti (1984) also defines an agreement as an event where one person promises to another or where two people promise each other to carry out something. From this definition, it can be concluded that when one or more people have agreed to bind themselves to each other on a matter, then it can be called an agreement. The agreement between two or more parties will also create rights and obligations for each party so that if one party does not fulfill its obligations voluntarily, the other party can impose sanctions in accordance with the contents of the agreement or sue the party that violates the agreement in court. Therefore, after the agreement is made, all parties bound by the agreement are obliged to comply with the agreement in the agreement. Agreements are usually made as proof that there has been an agreement between us and business partners or other parties. Examples of agreements include agreements on buying and selling, leasing, and even lending agreements.
What are the legal terms of an agreement?
An agreement can be said to be legally valid if it meets the legal requirements of the agreement. According to Article 1320 of KUHPer, there are four valid agreement conditions that must be met when making an agreement. Here is the explanation:
Agreement of Parties
In making an agreement, KH Friend must reach an agreement between the parties on the matters agreed upon. The agreement referred to here is that the agreement is born from the will of the parties without any element of mistake, coercion, or fraud. For example, if a buyer agrees to a land sale agreement based on coercion by the seller or other parties, then the existence of the element of coercion can be used as an argument for the injured party to submit a cancellation of the sale and purchase agreement.
Competency of the Parties
The term capacity referred to in this case means the authority of the parties to make an agreement. KUHPer determines that every person is declared capable of making an agreement, unless according to the law declared incapable. According to Article 1330 of the ICC, people who are declared incapable are those who:
- Minors, meaning those who are not yet 21 years old or not yet married
- Being under guardianship, according to Article 433 of the Civil Code, a person is considered to be under guardianship if the person is mentally ill, has low thinking capacity, and is unable to manage his/her finances, causing excessive waste.
Proficiency is not limited to individuals, but also includes the authority of a person in signing an agreement, such as in a PT or other legal entity.
Existence of an Agreement Object
An agreement must have a clear object. The object is not only in the form of physical goods, but also in the form of services that can be determined. For example, in a sale and purchase agreement, Mr. Rudi intends to sell a black Alphard car produced in 2015 to Mr. Santo for IDR 750 million. In the agreement, Mr. Rudi clearly states what goods will be sold along with the type, price, and specifications of the goods.
A Halal Cause
The lawful cause relates to the content of the agreement itself, where the agreement is made based on objectives that do not conflict with applicable legal provisions. Thus, agreements made based on improper or prohibited causes make the agreement invalid. Unlawful causes are causes prohibited by law, contrary to the norms of decency or public order. An example of an agreement whose cause is not lawful is when someone enters into a gambling agreement.
What are the consequences of violating the legal terms of an agreement?
The four valid conditions of the agreement that have been described previously have two categories, namely subjective conditions and objective conditions. Of the four valid conditions of the agreement, those included in the subjective conditions are agreement and the competence of the parties. Meanwhile, the existence of an agreement object and a lawful cause are objective conditions. Failure to fulfill the valid conditions of the agreement will lead to the cancellation of the agreement. However, the cancellation of this agreement is divided into two based on the category of the valid requirements of the agreement:
If the parties do not meet the subjective requirements
Then the consequence is that the agreement that has been made can be canceled or voidable. This means that one of the parties who feels aggrieved can submit a request for annulment to the judge. However, the agreement remains binding on the parties until there is a decision from the judge regarding the cancellation.
If the parties do not meet the objective requirements
Then the agreement is considered null and void, meaning that this agreement is considered to have never existed so that it will not bind the parties. For this reason, before making and agreeing to an agreement in a transaction, KH Friend needs to fulfill the four valid conditions of the agreement above so that the agreement can be implemented properly by the parties.
READ ALSO: Find out about default in agreement!
Of course, these arrangements are intended to clarify a cooperation or transaction, and avoid losses to any party in the future.
KH Contact
From the explanation above, the agreed agreement must not be made and carried out carelessly, because there are already legal provisions governing this matter, one of which is the legal requirements of the agreement. The valid terms of the agreement are important to know so that it has legal force. The legal force in an agreement serves as a protector so as not to cause harm to the parties to the agreement. Well, if KH Friend is still in doubt or has difficulty in making an agreement, you can just leave it to Kontrak Hukum. We provide the cheapest and most complete agreement-making services, and of course fulfill the legal requirements of the agreement in accordance with applicable law so that KH Pals no longer need to worry about the compliance of the agreement letter from Kontrak Hukum. The agreement making services that we provide, among others:
- Employment Agreement
- Cooperation Agreement
- Technology Agreement (Platform)
- Investment Agreement
- Distribution Agreement
- Event Agreement
- Lease Agreement
Very complete, isn’t it? Visit the KH Services – Agreements page or if you have any other questions about agreements, don’t hesitate to consult with us at Ask KH, or send a Direct Message (DM) to Instagram Kontrak Hukum @kontrakhukum.
