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The Nature of Contract
A contract is a set of of
promises
A contract is an agreement
that can be enforced in court
It is formed by two or more
persons who agree to perform
or to refrain from performing
some act now or in the future
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Perjanjian
Derived from “janji”
Consist of “janji”
That ”janji” can be enforced
before the court
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Contract Formation
Party
Party
Offer
Acceptance
Bargain
Consent
Contract
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Consent
Contract
Formulation
Written
Private Deed
Oral
Authentic Deed
Notarial Deed
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Consent
Meeting of
will
Declaration of will
How to formulate declaration
of will ?
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The Meaning of Contract
(Art 1313 ICC)
• An agreement is an act of two or
more persons binding themselves
to one or more other persons
• It is official definition
• According to scholars that
definition is uncompleted definition
and too broad
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The essential elements
of contract
• The parties who enter into
contract (parties)
• Offer and acceptance
(consent)
• The subject of contract (objek
perjanjian)
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Art 6.212.1 The Netherlands
Civil Code)
A contract in the sense of this title is a
multilateral juridical act whereby one or
more parties assume an obligation
toward one or more parties
(een overeenkomst in de zin van deze
titel is meerzijdige rechthandelling,
waarbij een of meer partijen jegens een
of meer andere een verbintenis
aangaan)
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The Definition of Contract
(Art 110 French Civil Code)
A contract is an agreement
by which one or persons
undertake obligation to
one or more other, to
transfer property, to do or
not to do something
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Contract and Mutual Consent
• Contract is the mutual consent of the
parties
• The mutual consent is not only
characteristic however, for the formation
of contract it is necessary that the
intention is expressed to the other party
• The corresponding expression of consent
must interdependent, without this
interdependency, there is no contract
• The intention of the parties must be aimed
at the creation of juridical effects
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Contract and Juridical Act
• A contract is a species of the
genus juridical act;
• juridical act is an act which
juridical effect are produce,
due the expressed intention of
one or more acting person
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The Conditions of Contract
• The consent of the parties
undertaking an obligation;
• Capacity enter into an obligation;
• A certain object which form the
subject matter of the
undertaking (subject certain);
and
• A legal cause of the obligation (a
permissible cause)
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The Condition of Contract in
Common Law
•
•
•
•
Agreement
Consideration
Contractual capacity
Legality
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Conditions of Contract
• Agreement. An agreement includes an offer
and acceptance. One party must offer to enter into
a legal agreement, and another party must accept
the terms of the offer
• Consideration. Any promises made by parties
be supported by legally sufficient and bargained for
consideration (something of value received or
promised, to convince a person to make a deal)
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Conditions of Contract
• Contractual Capacity. Both parties
entering into the contract must have the
contractual capacity to do so; the law must
recognize them as possessing characteristics
that quality them as competent
• Legality. The contract’s purposes must be
accomplish some goal that is legal and not
against public policy
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Defect of consent
• Duress (dwang)
• Mistake or
misrepresentation
(dwalling)
• Fraud (bedrog)
• Undue influence (misbruik
van omstandigheden)
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Classification of Contract
• Contract may be classified
according to the nature of
the branch of the law which
they refer;
• Based on the basis of this
criterion, we can
distinguish:
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Contract in the field of
family law (marriage)
• Marriage is a
contract in above
mentioned sense;
• It is a contract sui
generis.
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Contract in the field of
property
• These are contract aimed in
the establishment or transfer
of a rights to a thing;
• This kind of contract is in
general closely related to an
obligatory contract.
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Contract in the filed of the
law of procedure, especially
of the law of evidence
• By this kind of contract, the parties
deviate from the legal rules on the
evidence.
• Such a contract settlement is valid,
provided that it does not infringe on
rules mandatory;
• It is not an obligatory contract.
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Contract in the field of
public law
• Sometimes administrative
bodies enter into contracts with
a genuine public law character,
which can therefore be
classified as a public contract;
• The general rules of Book 3 of
the Civil Code may be applied
per analogiam to these
contracts.
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The most distinctions within
the class of obligatory
contract
There is no single classification
of contract, but several
classification depending upon
the criterion adopted the
purposes. Some of the most
important drawn by the
doctrine are:
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Classification of Contract
Contract
Kontrak Bernama
(Typical
Contract, Nominate Contract,
Nominati Contractus)
Kontrak Tidak Bernama
(Atypical Contract, Innominate
Contract, Innominati Contractus)
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Classification of Contract
Contract
Typical Contract or
Nominate Contract
(NominatiContractus)
These types are contracts
which are specially
contemplated and regulated
by the code
Atypical Contract or
Innominate Contract
(Innominati Contract)
Those types of contract which
are not specifically by the code
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Typical Contract
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Jual Beli (Sale and Purchase)
Tukar Menukar (Exchange)
Sewa Menyewa (Lease)
Melakukan Pekerjaan (Employment)
Persekutuan (Partnership)
Perkumpulan (Association)
Hibah (Donation)
Penitipan Barang (Deposit of Goods)
Pinjam Pakai (Loan for Use)
Pinjam Meminjam (Loan for Consumption)
Bunga Tetap atau Bunga Abadi (Permanent or Perpetual
Interest)
Untung-untungan (Contingent Agreement)
Kontrak Pemberian Kuasa (Power of Attorney)
Penanggungan (Personal Guaranty)
Perdamaian (Amicable Settlement)
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Atypical Contract
• These contract are not created by
ICC;
• These contracts are not regulated in
ICC;
• These contract are created by
people (business practices);
• These contract maybe regulated in
non ICC legislation
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Atypical Contract
•
•
•
•
•
•
Joint Venture Agreement;
Production Sharing Contract;
Agency Agreement;
Distributorship Agreement;
Franchising Agreement;
Hire Purchase Agreement
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Classification of Contract
Contract
Consensual Contract
Real Contract
This is a classification which ia based
upon the formation of contracts
Consensual contract are
formed upon a mere consensus
of the parties
Real contract are formed not only
a mere consensus of the parties,
but also require the delivery of
the object for their formation
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Classification of Contract
Contract
Bilateral Contract
(Reciprocal Contract or
Synallagmatic)
Unilateral Contracts
These contracts are characterized by
their reciprocal performances which
are independent in that if one party
fails to perform the other party is not
bound to perform either
Unilateral contracts are those
which imposes an obligation to
perform upon one only of the
parties to the contract, e.g. the
contract of donation
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Bilateral Contract and
Unilateral Contract
• A contract is bilateral if each of the
parties assumes on obligation in order
to obtain the performance to which
the other party, in exchange, obligates
himself towards himself. E.g. sale,
rent, employment contract
• A contract is unilateral if only one of
the parties assumes one or more
obligations towards the other party.
E.g. gift
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Classification of Contract
Contract
Underlying Contract
Underlying contract
have an independent
reason for existence
Ancillary Contract
The characteristic of an ancillary is
that it depends on external legal
relationship. e.g. a contract of
suretyship that strengthens a contract
of loan that changes the term on
another contract
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Sale and Purchase
Agreement (Sale of Goods)
A contract whereby one
person binds himself to give
a thing and the other to pay
a price therefore in money
(Art 1557 ICC)
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The Main or Substantive
Elements (Essentialia) of Sale
and Purchase)
• There are 2 substantive
elements of sale and
purchase
• Things and payment
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Things
• Tangible and Intangible
Things (corporeal and
incorporeal objects)
• Tangible thing is goods
• Intangible things is claim
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Price
• Payment with money
• The price of thing must equivalent
with its real value
• If the price is too cheap, that
relationship in concreto is not sale
and purchase, but tends to be gift
• The equivalent price and things is
actually not the requirements of sale
and purchase, but they are the
substances of sale and purchase to
achieve proper or reasonable payment
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When sale and Purchase
Happen ?
• Sale and purchase is assumed
exist when the parties get consent
• Consent: when seller and buyer
agreed about conditions of things
and price that is sold
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Obligations of Parties that is
Imposed by Art 1457 ICC
• Seller delivers and transfers
of title of thing that is sold
to buyer
• Buyer pays the payment
that is bought to seller
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Seller
Buyer
Money
Thing
Corporeal Object
Patrimonial Rights
A contract of sale must have an object that exist in the present
or will exist in the future
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Emptio Venditio
Roman Law
Koop en Verkoop
The Dutch Civil Code
Jual Beli
The Indonesian Civil Code
Consensual and obligatory character
A consensual contract which created for the parties to
transfer possession (and in practice the ownership)
promise to perform
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Obligation of Parties
Seller
1. to deliver the thing with its accessories
2. to deliver a thing that conform to the contract
3. to transfer ownership of thing sold
Buyer
to pay agreed price
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Obligatory Characters
Seller
Buyer
Consent
Contract
Creates obligations and rights of parties
After that should be followed by transfer of title
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Transfer of Title
(Levering)
Moveable
Things
Immoveable
Things
Intangible
Things
Possession
Registered
Cessie
Traditio Brevi Manu
Constitutum Posseserium
Exception: Commercial
Code and Statute of Capital
Market
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Agreement
Buyer
Seller
a parcel of land
Land deed official
Land Deed
Land Office
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The Obligations of Seller
• To delivers of things
• To transfer the title of things
• To guarantee or secure things
that it does not contain
disputes with others
• To guarantee the sold things
that it does not contains
hidden defect
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The Obligations of Buyer
• The main obligation is to perform
the payment
• Basically the time and place
payment where the payment is
done is the same place where it
is delivered.
• Place and time of payment can
be arranged by parties in
agreement or contract
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Exchange
• Art 1541 ICC: an exchange is an
agreement whereby both parties bind
themselves to reciprocally give each
other one goods, in exchange for
another
• Art 1542 ICC: everything that can be
sold, can also be the object of
exchange
• Art 1546 ICC : for the other provision
concerning the agreement of sale and
purchase shall apply for the exchange
agreement
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Obligations to Guarantee
Party
Things
Owner
Party
Things
Owner
To guarantee that there is no dispute, no security,
and does not contains hidden defect
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The Character of
Exchange Agreement
• Obligatory character
• The parties become owners when the title of
things is transferred
• The method of transfer of title in exchange
same with transfer of title in sale and
purchase
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Lease (Huur en Verhuur)
• Lease is an agreement, by which
one party binds himself to give the
other enjoyment of goods, for
definite period and with payment
of a price, which payment has been
agreed by the latter party (Art 1548
ICC)
• Any kind of goods, either moveable
or immoveable
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Lessor Obligations
• To deliver property to lessee (to
transfer the enjoyment rights);
• To keep the leased property
during the period of lease
• To guarantee that lessee is able
to enjoy the leased goods
peacefully during the period of
lease
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Lessee Obligations
• To pay the rent fee
• Use the leased goods in a
reasonable way according to the
provisions of contract
• To bear all the losses that may rise
during the lease period, unless
lessee can prove that the damage is
not caused by lessee’s mistake.
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Hire Purchase (Beli sewa)
Penjual Sewa
Pembeli Sewa
To deliver the goods
To pay installment
The transfer of title will be implemented after the last installment
is paid
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Definition Hire Purchase
• Hire purchase is treated installment sale
and purchase;
• Hire purchase is treated as lease;
• Hire Purchase is treated as sale and
purchase;
The Netherlands law and The Indonesian
Law treat hire purchase as installment
sale and purchase
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Huurkoop
• In The Netherlands Hire Purchase is
categorized as nominate contract.
• Huurkoop is de koop op afbetaling,
waarbij partijen ovreenkomen, dat de
verkochte zaak niet door enkele
aflevering in eigendom overgaat , maar
pas door vervulling van de opschortende
voorwaarde van algehele betaling van
wat door de koper uit hoofde van de
overeenkomst verschuldigd (Pasal 1576h
ayat (1) Buku 7A BW)
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Keputusan Menteri Perdagangan dan
Koperasi No. 34/KP/II/80
Beli sewa adalah jual beli barang dimana
penjual melaksanakan penjualan barang
dengan cara memperhitungkan setiap
pembayaran yang dilakukan oleh pembeli
dengan pelunasan atas harga yang telah
disepakati bersama dan diikat dalam satu
perjanjian, serta hak milik atas barang tersebut
beralih dari penjual kepada pembeli setelah
harganya dibayar lunas oleh pembeli kepada
penjual.
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Leasing
• Leasing derived from word
“to lease”
• Leasing is related to
finance
• Leasing is different with
lease
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The meaning of Leasing
Kegiatan pembiayaan dalam bentuk
penyediaan barang modal untuk baik secara
sewa guna usaha dengan hak opsi (finance
lease) maupun secara sewa guna tanpa hak
opsi (operating lease) untuk digunakan oleh
lessee selama jangka waktu tertentu
berdasarkan pembayaran secara berkala(Surat
Keputusan Menteri Keuangan No
1169/KMK.01/1991)
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Finance Lease
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Finance Lease
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Operating Lease
• The lessor is the owner of
goods
• That goods is leased to
lessee
• Basically operating lease
same with lease
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Aircraft Operating Lease
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The Goal of Leasing
• Lessee has no intention to
own that goods
• Lessee intends to lease
that goods
• lessee intends to use or
enjoy lessor goods in
definite term
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Mandate/Power of
Attorney
(Pemberian Kuasa)
Mandate is a contract
whereby one party, the
mandatory, binds himself
toward another party, the
mandator, to perform one or
more juridical acts on account
of the mandator without
there being a relationship of
employment
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Mandate
The
Mandatory
Gives authority to
represent or to perform on
behalf of mandatory
The
Mandator
To represent
the
mandatory
Third Party
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Mandate/Power of Attorney
(Pemberian Kuasa)
Mandate is agreement
whereby one person gives
power (authority) to another
person who accepts it, to
perform on his behalf (Art
1792)
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The Formation of
Mandate
• The power can be given and
accepted by a notarial deed
general instrument, private
deed, even by letter or verbally
(Art 1793 (1) ICC)
• The acceptance of mandate can
also occurred tacitly and
concluded from the execution of
such mandate the mandatory
(Art 1793 (2) ICC)
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The Sources of
Representation
Representation
Stipulated by
Statutory
Law
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Stipulated
by
Agreement
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Sources of Representation
Represented by his/her
parent or guardian
Minor
Corporation
Represented by director
These representations are stipulated
by laws
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Sources of Representation
Mandatory
Mandator
Power of
attorney creates
representation
This
representation is
stipulated by
power of attorney
(mandate)
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The Kinds of Power attorney
• The power attorney may be
performed specially , namely
concerning only one specific
interest or more, or generally,
namely covering all interests of
the authorizer (principal)
(1) Specific power of attorney
(2) General power of attorney
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The Extinguishment of
Mandate
• By revocation of mandate by
mandatory;
• By notification to terminate
the mandate by mandatory;
• By the death of the
mandatory;
• By the marriage of the women
who grants or receive the
mandate.
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Mandate/Power of attorney
Commission
Principal (Producer)
Agent
To sell on behalf of producer
Buyer (consumers)
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Agency Agreement
• Art 7.428 The Netherlands Civil Code;
• The agency contract is a contract in
which one party, the principal, instructs
the other party, the commercial agents,
and the latter undertakes for a
specified or unspecified time and for a
remuneration to intermediate with
regard to the conclusion of contracts
and possibly to conclude contracts in
the name and for the account of the
principal without being subordinate to
him
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Business Agent Characters
• An agent must be an independent
intermediary;
• There are no employee – employer
relationship between him and his
principal;
• The agent does not act in his own
name, but in the name, to expense
and at risk of his principal
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The Substantive Clauses of
Agency Agreement
• The appointment of agent
• The agency area
• The obligations and rights of
principal;
• The obligations and rights of
agent;
• The agency period
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Obligations – Rights of
Principal
•
•
•
•
•
To supply the product;
To keep the quality of products;
To assist product promotion;
To conduct technical assistance
Prohibition to appoint another
agent in the same area
• Right to receive payment from
agents
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Agents Obligations and Rights
• To sell the principal products
• To promote the principal products
• To keep principal interests related to
patent, trade mark, (or service mark),
trade secret, ect;
• To return all of the data and information
when the contract ended or terminated;
• To make annual report
• Prohibition of selling product di bawah
harga
• Prohibition to be an agent or to sell
similar product
• Agent has right to receive commission
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Distribution Agreement
Seller
Buyer
Producer
Distributor
Products
Consumer
now, the products is own
by buyer, then the
products is sold by
distributor to consumer
The products is sold
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Distribution Agreement
Seller
Buyer
Producer
To appoints buyers as
distributor
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Relationship Between
Producer and Distributor
Producer
Distributor
Sale and Purchase
Agreement
Re-seller
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Relationship Between
Distributor and Consumer
Distributor
Consumer
Sale and Purchase
Agreement
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Essential Clauses in
Distribution Agreement
• The appointment of
distributor;
• The term of agreement;
• The distribution territory;
• The Producer/seller
guaranty; and
• The distributor obligations
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Beirdorp AG.
Hamburg,
Germany
Produce:
Plaster (ban aid),
heating patch,
etc
PT Beirdorp Indonesia,
Malang,
Indonesia
Intents to produce the
same products under
the same trademark
Trademark:
Hansaplast
1.
2.
3.
4.
License Agreement
Patent License Agreement;
Trademark License Agreement;
Trade Secret License Agreement;
etc
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License Agreement
Licensor
Licensee
1. To license the formula how
to produce the product;
2. To license the using of the
trademarks
Licensor does not joint to operate
the licensee company
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Management Contract
• There are two parties in the
contract;
• They are owner and operator;
• The hotel owned by the owner;
• The operator owns the wellknown servicemarks,
managements system, human
resources who operate the
management;
• The hotel is operated by operator
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Franchise Agreement
Franchisor
Product
Marketing and Selling
1. Under one trademarks or Servicemarks;
2. Under one systems;
3. Under one standards
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Franchise Agreement
Franchisor
Technology
1
Franchisee
Trademarks or
Servicemarks, etc
2
Business System
Business
Management
3
intent to use technology,
trademarks or servicemarks,
and business system that
is developed by franchisor
Marketing
System
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