Commercial Contract Law Reform in Indonesia
By: Rizal Alif, SH. MH
*)
A. Introduction.
Nearly a third of humanity in this world
are originally the law regulated from
the British state. One such product is the English law Contract Forms According
to English Law or the Contract Formation In Home Law (CF Padfield, ELB, DPA,
1988). Departure from these thoughts in anticipation of the era of free trade
and foreign investment (WTO / AFTA / APEC), according to the opinion of the
writer, we need to learn and understand the business contract or civil code according to English Law as a
comparative study with the contract by the Dutch colonialists heritage law as
set forth in Third book of the law of Civil Law / BW (R Subekti, 1989) in the
context of business contracts legal reform
or civil charges more in line
with the era of legal reform, free trade and foreign investment. Example the
controversial of the legal aspects of
Employment Work (PRSP) and the Memorandum Of Understanding (MOU) by the contractual
Business law of Indonesia
According to English law of Contract is
a branch of civil law or opposed to public law. The contract is a binding
agreement of the parties who made them. Examples A and B agree to carry out
buying or selling a car. A and B as the seller as a buyer. Basically, the
consensus in the contract binding on the parties as the law that means the
parties are prohibited violate the consensus or commitment - breach of commitment is or is not allowed either party to cancel the
contract. Each contract based on the agreement of the parties. But not
every agreement between the parties is a contract. Because the agreement can
only indicate the desire of the parties about the agreement should have legal
consequences. Agreement where a husband's family agreed to pay wife some money
to manage the household is not a contract under English law ..
B. History of Contract Law in England
Countries where English is the origin of
the Anglo-Saxon legal system. Anglo-Saxon legal system is considered as born in
about 1066 AD, ie during the Normans defeated
the native people in Hastings and conquered England UK
However, in the UK
1. Promissory Oath
2. Suretyship.
One of the most prominent phenomena in English law, as well as in the Anglo-Saxon
legal system of another is so dominant influence of the theory of equivalence
in a contract, so that in every contract, both parties must perform. Contract with
the achievements of only 1 (ones) parties, such as grants, contracts are not
considered perfect. Therefore, throughout the history of the state contract
law, Anglo-Saxon countries, the struggle about the meaning of achievement other
side (contract achievement) continued to take place, which form in the doctrine
of consideration.
. C. Understanding Contract.
What is meant by contract is an
agreement which agreement (promissory agreement) between 2 (two) or more
parties that may result, modify, or remove the legal relationship. (Black,
Henry Campbell, 1968: 39.4). Furthermore, there is also a given understanding
to the contract as an agreement or series of agreements in which the law
provides compensation for the contract defaults, and by law, and contract
implementation is considered to be a task to be performed.
D. Comparison of commercial contract law according to English law and Indonesian law.
D.1. Commercial contract according to English law
Validity of the contract requirements by English law (WF
Frank, 1975):
a). The parties must have legal capacity to make contracts;
b). One side must make a binding offer to the fain, and the
offer must be accepted;
c). Contract must be
supported by consideration;
d). The contract must
be made in special shapes.
e). Agreement of the
parties should be legal (not illegal);
Contracts that do not meet the
above requirements are not legally binding, or "null and void".
The
explanation of the terms of the
contract according to English law mentioned above is as follows:
a). Capacity
There are 3 (three) levels inability to make a contract
according to English law (Philip S James, 1979):
- People who have not grown (minor).
Affirmed the common law rules that
children do not contract legally binding. Every person under the age of 21
years who makes a contract is illegal. No one should be allowed to approve a
contract made before the adult concerned (the Infants Relief Act 1874).
According to the Sub 1 The Family Law Act Report 1969, aged 18 to 21 years as
the majority of people who have not grown. Both laws and regulations that the
common law regarding the capacity of immature people who can not be changed.
There are 3 (three) exceptions to the
general rule is that children have adult children who can not be tied to contracts.
First, each contract child adult children who have not received necessaries, he
was bound to pay a reasonable price for them. Second, there are certain kinds
of internships and service contracts
such as contracts to pay the rent. Third, trade and service contracts in court beneficial to a child who has not grown.
There are 2 (two) ways to manage the less
balanced justice most of those who make contracts with immature people in the
law. First place, on the one hand a special appearance will not be guaranteed
to run in an immature child legally. Second place, the court may force people
sometimes immature bring legally, at
least when he has acted with pride, to improve every advantage that he has
received under the contract.
2. Cooperative (Corporations)
At common law has been stopped to make a
contract for cooperation based on respect for all the corporate bodies act 1960
contract. Cooperative agents can now make contracts on behalf of their
contracts relating to each problem in the power of any cooperative contract by the
same contract that has been made between individuals.
3. Crazy and drunk.
Crazy and drunk people are not legally valid
to make a contract.
b). Offer and Acceptance (Offer and
Acceptance).
All agreements can be analyzed in a bid
or Offer and Acceptance or Acceptance, which can be made with the words or
behavior. But not all supply and acceptance will be allowed into the Law
Covenant. There are laws that govern
legally. Offer and Accepetance we must consider (Philip S James,
1979).
First, the Offer, an offer can be made to specific people or the
general public to accept it. But the offer must be communicated to the
recipient as a fact question. In the case of cancellation, any offer, without
the seal and open consideration assumed a reasonable time unless it is not
expressed to open a bid within a limited period of time. Furthermore, unless an
additional agreement to the contrary that have been made, it is always open to
Bid or cancellation of bidding. However, the cancellation rules that must be
communicated before the acceptance is made. Example cases Vantiem Byrne vs.
Hoven (1880). In order to be legally binding, an offer must be clear and should
not be wrong. As known from the judicial decision in the case of Harvey
Second,
acceptance, the principle that the recipient must know the quote at the
time he signed the receipt for the agreement. Recipients do not need to sign it
with the other he word can also sign behavior. Nevertheless interest must take
place. Laws of goods and services in 1971 states that when goods delivered to a
voluntary, they are considered as an unconditional gift to him on condition
that certain conditions.
Requirements are:
1. During the period of 6
months from the day they are received, the sender did not take their position
and recipients do not reject with no reasonable refused to allow him to do so;
2. No less than 30 (thirty)
days before the expiry of a period of 6 months to give notice to the recipient
and the sender 30 (thirty) days from the date of this notification does not
take the goods. Or the recipient refused to allow it without reasonable: the
contract with the correspondence in which the offer does not provide a specific
time or acceptance model, the rule is that acceptance has been
made when the letter of approval or acceptance
has been mailed. Sometimes this is called regulation vs. Adam Lindsell (1818). If
the offer to attract or cancel its
requirements, he must do before that time. However, if it is determined that
revenue should be communicated in order to be effective, would be ineffective
to post, post will not be enough to conclude the contract.
Both offer and acceptance of a contract can be completed
only if all the requirements of the essential requirements has been approved.
So that all things should be done with the full.
c). Consideration
(consideration)
A contract will be executed under seal,
unless the plaintiff can show consideration has been provided. Consideration is
one of the main elements, which distinguishes binding contract can implement
the promise, we must consider now some of the rules about it. Consideration may
be defined as a valuable consideration in the law can stand of the same rights,
interests, benefits or additional advantage
to one party or some patience, damage, loss or responsibility given, suffering
or the execution by others.
Consideration must be real, is
shown in the example below:
a. A promise to do something that obviously is impossible is
clearly less valuable;
b. A vague promise that will not continue the consideration.
d). Formalities
No special formalities are required to create a contract.
Contract exception should be made under the contract stamp, with the Act is (Philip S James, 1979):
1. The contract is only legally valid when it is created in a particular Form:
a.
Promises that statement did not deal
well by the modern classification, they are not treaties;
b. Contracts
are made for legal entities;
c. All property
on land or any interest over land
(subject to the Property ACR 1925, Sub 52 (2);
d. The policy of marine insurance policies;
e. Proof of payment or receipt;
f. Treaty credit agreement.
2. The contract
required to prove in form a special form: proof of evidence of this
contract the contract in a special form of effective only evidence of the
existence and failure to produce evidence of only resulted unenforceable. The
contract is a contract for discussion:
a. Promises to answer the debts, defaults or failures of
others, however they are only
guarantee for covering contract, no
compensation:
b.
Contract for the sale or other disposition of land or
any interest in land.
Regarding contracts
written contract, the Charter required the original evidence. Next take a
single document that includes all contracts. When the request stated that the necessary evidence is not
provided, the court will deal with 2
(two) ways:
1.) They will
make the interpretation of each section
to specific facts or the facts beyond the scope
of good quality before cases they need;
2.) Doctrine
of part performance when a party has conducted part of the deal, others will be
forced to implement to allow it to avoid its obligations to the Charter stated
in the case.
First,
the action winnow (the need to show that it has been implemented based on the
belief in a contract with the defendant that is consistent with the contract
statement.
Second, measures must be carried
out can not be fair to defendant , took
advantage and made void.
Third, the doctrine can only be
involved in the case where the contract was written that an act of fair rights
of special actions will be provided.
Fourth, contract claims, Ex
Hyphotese / morgage thought it could not be proved with written evidence, must be proof of property
with oral or other evidence.
e). Illegal
Doing something illegal is not an
objective of the contract. Examples of an illegal contract to contract common
law is a contract to perform crime.
Contracts contrary to public policy and contract that the contract against the
rules of morality. llegal is a vague and the term is not defined. As a result
of various elements according to the nature of the conflict with the law.
Something is clearly wrong is clear then the court will refuse to perform the
contract, which has a hidden relationship with them. An extreme example of an
act of bad behavior that is illegal prostitution. As a result of the
prostitution contract is "null and void". Therefore, contrary to the
law.
Other examples of illegal contracts that
are contrary to public policy. The term public policy means that all the
principles of common law and the balance that has been involved centuries past
century, the rules of public policy has been created for them by the judge what
they consider to be a public good to the contrary regarding the contract
indicates that certain restrictions are put on trial the right to a contract
that they believe the contract contrary to public interest. An agreement contrary
to the public interest contracts restricting
is trade or Restrain Trade
That the
validity of an agreement English was determined according to law, among others:
a. Supply and demand (Offer and Acceptance).
b. requirements include: 1) Capacity to make and enter into agreement: for example, the children (Minors
and coservatorship / Curatele not
smoothly in this capacity; 2) Formality; 3) Consideration and 4) Legality.
The termination of
the agreement can be done through: a) by the performance; b) by agreement; c)
by frustration; d) and by breach.
D.2. Reform and Breakthrough in Commercial Contract Law in Indonesia
From the contract terms according to British law above as writer explained , obviously different
with the contract terms, according to the book-3 of Civil Law / BW. Therefore Both Government
and Parliament should have to make the Law of Contract Law /
commitment / agreement that can accommodate private development dynamics
business in the era of globalization of trade and investment today (CAFTA/ WTO
/ AFTA / APEC) to compare the contract according to English law, which embraced
the validity of the contract requirements, among others through the offering
and acceptance of the above, which also embraced in Article 2 paragraph (1) the
principle UINDROIT principles which states:
A contract may be
concluded either by the acceptance of an offer or by the conduct of the parties
that is to show sufficient agreement.
The essence of
the foregoing is that a contract is due to (1) offer and acceptance and (2)
because the behaviors that demonstrates the existence of consent to be bound by
the contract.
Objectives comparative studies in the
harmonization / legal reform contract / commitment / agreement to civil law
book -3 is because the law is part of the culture of a nation. It is the fact
that every nation has their own culture and also have their own laws, which
difference from culture and other
national laws. So. in a comparative study of law, we do not merely want to know
the differences, but the important thing is to know the causes of these
differences. For that we need to know the background of the legal rules that we
encounter.
Comparative law is a method of comparing one legal institutions from one legalk institution with legal institutions more or less equal .
With this system compare , we can find elements of the same and differences between the two legal System.
According to Satjipto Rahardjo, comparative law in the sense of comparing the
system of positive law of nations that study with other nations. Meanwhile, according to
Black Law Dictionary: Comparative jurisprudence: "The Study of the
principle of legal science by the comparison of various systems of law".
The need to study the appeal of this
commercial contract law is:
1 For the needs of
Sciences.
2. For practical needs: a) help the formation of a national
law in the broadest sense: b) help making international agreements or treaties
of international civil law: and c) to avoid any disputes and international misunderstanding.
The basis
of the UNIDROIT principles is to achieve an agreement be sufficient delivery
contracts. However UNIDROIT principles
are not regulate such contracts
legal terms adopted Section 1320 or BW and English contract law over such a)
does not have the ability /; b) does not
outhority n / and c) the immorality and illegality. As affirmed in Article 3 paragraph (1) UNIDROIT principles:
These principles do not deal with invalidity arising from:
a) lack of capacity; b) lack of authority, and c) Immorality or ilegality.
UNIDROIT principles are very important in the era of globalization and
the globalization of free trade (CAFTA/ WTO / AFTA / APEC / EEC) nowdays for being the benchmark of contract law reform around the world almost,
like the Netherlands, Germany, USA, Canada and even Russia. This is a growing
phenomenon of private law international harmonization,
priciples of contract law and the UNIDROIT
principles or the English law of contract contains a provision is good and
beneficial for developing countries like Indonesia fore through legal reforms
stipulated in the contract as the 3rd
book because of Civil Law / BW and draft
agreement was drawn up by Prof. Dr.
Prodjodikuro Wirjono in 1961, its Draft of contract Law was made by
Prof R. Subekti, SH 1974, its draftedof the
manuscript academic was made by R. Setiawan SH in 1994 and Prof. Dr. Tim. CFG
Sunaryati Hartono, SH in 1995, still has shortcomings that need to be refined
again. globalization as business
transactions increasingly dynamic in the nearly
future . ( CAFTA WTO / AFTA / APEC /)
The terms of the contract valid under
Indonesian law to a third set of books of Civil Law / BW of the legal commitment, which is a legal
product of Dutch colonialists, who comes from the Code Napoleon which was later adopted by Netherlands in 1838 and in 1848 Civil Law has been regulated in Indonesia, where Holland himself has made revisions to their contract
law, from Civil Law / BW to New BW ( New BW Has been studying now in Law School
of Unpad Bandung, mayoring business law/ private law in
Bachelor/master/doctoral law degree), which is more adapted to the principles
of international commercial contracts in the UNIDROIT in 1994 in the framework
of free trade globalization and foreign investment. Even the UNIDROIT
principles have been adopted into the principles of contract law commercial EEC. To this - things that are
important in the context of globalization for anticipating business transactions for the nation's
economic development and business law, Indonesia was always late compared to
Singapore, Malaysia /, China and and the Netherlands as well as Law No. . 8 of
1999 on Consumer Protection and Law No.
5 of 1999 on the prohibition of monopolistic practices and unfair business
competition, the Act on Electronic Information and Electronic Transactions and
other new laws that have been released in era reformation.While Book 1
and 2 of civil law / BW have been codified it into law No. 1 Year 1974 on
Marriage and the Law no. 5 / 1960 on Basic Provisions of Agrarian /Land and Law
No. 4 of 1996 on the Rights of Mortgage relevance with Land
and other things relevance with land, except to the 3rd book of civil law and commitment to-4 Buke of expiry.
Legal terms Contract according to the III of Civil Law
book is as follows:
1. Legal Terms of Objective Based on Civil Code Article 1320
KUH.
2. Legal Terms of Subjective KUH Under Article 1320 Civil
Code.
3. Legal Terms of General
Outside KUH Article 1320 Civil Code.
4. The Special Legal Terms.
Here is an explanation of each category, is as follows:
1. Legal Terms of Objective Under Article 1320 Civil KUH
Objective legal requirements of a contract under Article
1320 Civil KUH is composed of:
a. Particular subject and
b. Causa allowed.
With certain conditions intended subject is that a contract
must be related to a particular thing, clear and justified by the law. While
the conditions that allowed the
causa meant was that a contract should be made with
the intent or reason in accordance with applicable laws. So, no contract may be
made to do things contrary to the law.
Legal consequences if one of these objective conditions are
not fulfilled is that the contract is invalid and null and void (null and
void).
2. Legal Terms of Subjective Under Article 1320 Civil Law
Into the legal requirements of a contract that
subjective Civil Law under Article 1320 Civil Code included the
following things:
a. The will and the agreement
b. Authorities do.
In terms of the deal will mean is that in order for a
contract is considered valid by the law, both parties have no opinion about the
suitability of what is regulated by the contract.
By law generally accepted theory that the agreement will force it ¬ there, if
not one of the elements of the following elements:
a. Coercion (dwang, duress).
b. Fraud (bedrog, fraud).
c. Oversight (dwaling, mistake).
While authorities do the terms mean is that parties to a
contract should be someone who by law is authorized to make such contracts. The
authority to create a new ¬ considered valid by the law when the contract made
by the people as follows:
a. People who've grown up.
b. People who are not placed under remission.
c. Women who husbands (this requirement is not applicable
anymore).
d. People who are not prohibited by law to perform certain
actions ¬ it. For example, between husband and wife can not do buying and
selling contracts. Or people who do ¬ a contract for and on behalf of others,
but the letter was not legitimate power.
Juridical consequences of not fulfilling one of these
subjective conditions is that the contract was "irrevocable"
(voideble, vemietigebaar) by one party of berkepenting ¬. If the cancellation
action is not done, then the contract still occur and must be implemented as a
valid contract.
There are several requirements that apply to contracts
generally, but in ¬ arranged outside the Civil Code Article 1320 KUH, is as
follows:
a. The contract must be done in good faith Tub
b. The contract must not be contrary to the prevailing
ke.biasain.
c. The contract must be based on the principle of propriety.
d. The contract must not violate the interests urnum.
If the contract is done by breaking one of the 4 (four) of
those principles, then the consequence is that yuridisnya such contracts
invalid and null and void (null and void).
In addition to these requirements above, then a book contract,
according to the Civil Law -IIII, must meet some specific requirements intended
to contract a special contract. Specific requirements are as follows:
a. Terms of the contract is written for a particular
contract.
b. Terms of the contract deed for a particular contract.
c. Terms Deed of certain officers (other than notary) for
contract-¬ a particular contract.
d. Conditions of permission from the authorities to
contract-¬ a particular contract.
According to Article
1381 civil law states contract
can be terminated because: of
- Payment
- Offer a payment in cash, followed by storage or care
- Updates debt
- Mix of debt
- Destruction of goods indebted
- Cancellation
- The passage of time
Article 1381 of Civil Law
a manage a variety of ways- contract abolishment of the agreement and commitment
to contract born of the Act. Termination ways mentioned in section 1381 is not completed yet because its not regulated termination because of the death of someone in a greement can only be carried out by
legitimate one party.
E. PRINCIPLES OF CONTRACT
In English contract law, including the book to Civil Law -3
and UNIDROIT principles are universally applicable principles of law recognized
some of the contract, which is as follows:
1. Contract as a legal principle set.
2. The principle of freedom of contract.
3. The principle of pacta sunt servanda.
4. The principle of consensual.
5. Obligatoir principle.
Here is an explanation for each principle mentioned above,
is as follows:
1. Basis Contract Law Set For
Law set
(aanvullen recht, optional law) is the rule ¬ rule of law applicable to the
subject of law, for example, the parties to a contract.
2. The principle of freedom of
contract
The principle of freedom of contract
(freedom of contract) This is a consequence of the application of legal
principles to the contract as set ¬. In this case what is meant by the
principle of freedom of contract is a principle that teaches that the parties
to a contract in principle free to make or not make a contract, as well as
their freedom to set their own ¬ contents of the contract. The principle of
freedom of contract is limited by signs hukurn following signs:
a. Must qualify as a contract.
b. Not prohibited by law.
c. Does not conflict with the prevailing custom.
d. Should be implemented in good faith.
3. Principle Pacta Sunt Servanda
The term "pacta sunt servanda" means "binding
promise". Which in ¬ meant was that a contract lawfully made by the
parties binding on the parties in full according to the contents of the
contract. Famous term is "my wotd is my bonds". Or in accordance with
Indonesian simile that "if the cow is held the rope, if the man held his
mouth".
4. The principle of consensual
What is meant by the principle of a consensual contract is
that if a contract has been made, then he has a valid and binding in full, even
in principle, the written requirements were not required by law, except for
some specific types of contracts, which are required in writing requirements.
Terms are for example required in writing to the following types of contracts:
a. Contract peace.
b. Insurance contract.
c. Plead / Hibah contract.
d. Sale
5. Basis Obligatolir
Obligatoir principle is a principle which determines that if
a contract has been made, then the parties have been bound, but the attachment
was only limited to the emergence of the rights and obligations of the eye
alone. While performance can not be enforced because the material contracts (zakefijke
overeenkomst) has not happened.
Due
/ legal implications of the commitment / agreement / commercial contracts are:
a. The parties are bound p [no content, and also based on agreement decency, custom and the law (Article 1338,
1339 and 1340 of Civil Law ).
Carry out with b. Agreemnt must have
good faith/good will , Article 1338 paragraph 3 Civil Law
c) The lender may ask for cancellation of adverse actions
debtor creditor (actio paulina)-Section 1341 of Civil Law
F. Closing.
From the above description, it can be
concluded that the commercial contract law, according to English law and the
UNIDROIT principles of international trade law / international civil Law can be used as inputs for the improvement of the
legal draft agreement / commitment / commercial contracts existing under the
laws Indonesia (Book to - III BW / Civil Law for the Government and Parliament for the
creation of harmonization of commercial contract law (lex mercatoria) that
can be adopting interest of all stake holders / stakeholders
associated with contract law commercial interest in the globalization era of free
trade and foreign investment now This (CAFTA AFTA / APEC / WTO), particularly
given the premises is also one of the G-20, into the group of countries
Advanced Industrial (G-7) such as Japan, USA, UK, Germany and so on.
*). Business Legal Consultant / Researcher and writer indpendent issues and
international business law FHUI Alumni, Depok and Masters in Business Law,
Unpad Bandung and certificate
holders Summer course of bahasa law from the London School of Economic &
Political Science, London.
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