Ridwan Khairandy 1

Ridwan Khairandy

Contract Law

2015

Ridwan Khairandy 2

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

Ridwan Khairandy 3

Perjanjian

Derived from “janji” Consist of “janji”

That ”janji” can be enforced before the court

Ridwan Khairandy 4

Contract Formation

Party Party

Offer Acceptance

Bargain

Consent

Contract

Ridwan Khairandy 5

Consent

Contract

Formulation

OralWritten

Private Deed Authentic Deed

Notarial Deed

Ridwan Khairandy 6

Consent

Meeting of will

Declaration of will

How to formulate declaration of will ?

Ridwan Khairandy 7

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

Ridwan Khairandy 8

The essential elements of contract

• The parties who enter into contract (parties)

• Offer and acceptance (consent)

• The subject of contract (objek perjanjian)

Ridwan Khairandy 9

Art 6.212.1 The NetherlandsCivil 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)

Ridwan Khairandy 10

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

Ridwan Khairandy 11

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

Ridwan Khairandy 12

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

Ridwan Khairandy 13

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)

Ridwan Khairandy 14

The Condition of Contract in Common Law

• Agreement• Consideration• Contractual capacity• Legality

Ridwan Khairandy 15

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)

16

Ridwan Khairandy 16

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

Ridwan Khairandy 17

Defect of consent

• Duress (dwang)• Mistake or

misrepresentation (dwalling)

• Fraud (bedrog)• Undue influence (misbruik

van omstandigheden)

Ridwan Khairandy 18

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:

Ridwan Khairandy 19

Contract in the field of family law (marriage)

•Marriage is a contract in above mentioned sense;• It is a contract sui

generis.

Ridwan Khairandy 20

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.

Ridwan Khairandy 21

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.

Ridwan Khairandy 22

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.

Ridwan Khairandy 23

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:

Ridwan Khairandy 24

Classification of Contract

ContractKontrak Bernama(Typical Contract, Nominate Contract,Nominati Contractus)

Kontrak Tidak Bernama(Atypical Contract, Innominate Contract, Innominati Contractus)

Ridwan Khairandy 25

Classification of Contract

Contract

Typical Contract or Nominate Contract

(NominatiContractus)

Atypical Contract or Innominate Contract (Innominati Contract)

These types are contracts which are specially

contemplated and regulated by the code

Those types of contract which are not specifically by the code

Ridwan Khairandy 26

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)

Ridwan Khairandy 27

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

Ridwan Khairandy 28

Atypical Contract

• Joint Venture Agreement;• Production Sharing Contract;• Agency Agreement;• Distributorship Agreement;• Franchising Agreement;• Hire Purchase Agreement

Ridwan Khairandy 29

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

Ridwan Khairandy 30

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

Ridwan Khairandy 31

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

Ridwan Khairandy 32

Classification of Contract

Underlying Contract Ancillary Contract

Underlying contract have an independent reason for existence

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

Contract

Ridwan Khairandy 33

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)

34

The Main or Substantive Elements (Essentialia) of Sale and Purchase)

• There are 2 substantive elements of sale and purchase • Things and payment

35

Things• Tangible and Intangible

Things (corporeal and incorporeal objects)

• Tangible thing is goods • Intangible things is claim

(piutang)

36

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

Ridwan Khairandy 37

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

38

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

Ridwan Khairandy 39

Money

ThingCorporeal Object

Patrimonial Rights

A contract of sale must have an object that exist in the present or will exist in the future

Buyer Seller

Ridwan Khairandy 40

Roman Law

The Dutch Civil Code

The Indonesian Civil Code

Consensual and obligatory characterA consensual contract which created for the parties

to transfer possession (and in practice the ownership)

promise to perform

Emptio Venditio

Koop en Verkoop

Jual Beli

Ridwan Khairandy 41

Obligation of PartiesSeller

1. to deliver the thing with its accessories 2. to deliver a thing that conform to the contract3. to transfer ownership of thing sold

Buyer

to pay agreed price

42

Obligatory Characters

Seller Buyer

Consent

Creates obligations and rights of parties

After that should be followed by transfer of title

Contract

43

Transfer of Title(Levering)

Moveable Things

Immoveable Things

Intangible Things

Possession Registered Cessie

Exception: Commercial Code and Statute of Capital Market

Traditio Brevi Manu

Constitutum Posseserium

Ridwan Khairandy 44

Buyer Seller

a parcel of land

Land deed official

Land Deed

Land Office

Agreement

Ridwan Khairandy 45

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

Ridwan Khairandy 46

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

47

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

48

Obligations to Guarantee

Party Party

Things Things

Owner Owner

To guarantee that there is no dispute, no security, and does not contains hidden defect

49

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

Ridwan Khairandy 50

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

Ridwan Khairandy 51

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

Ridwan Khairandy 52

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.

5353Ridwan Khairandy

Ridwan Khairandy 54

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

54

Ridwan Khairandy 55

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;

55

The Netherlands law and The Indonesian Law treat hire purchase as installment

sale and purchase

Ridwan Khairandy 56

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)

56

Ridwan Khairandy 57

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.

5858Ridwan Khairandy

Leasing(Sewa Guna Usaha)

Ridwan Khairandy 59

Leasing • Leasing derived from word

“to lease”• Leasing is related to

finance • Leasing is different with

lease

59

Ridwan Khairandy 60

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)

60

Ridwan Khairandy 61

Finance Lease

61

Ridwan Khairandy 62

Finance Lease

62

Ridwan Khairandy 6363

Ridwan Khairandy 64

Operating Lease

• The lessor is the owner of goods• That goods is leased to

lessee • Basically operating lease

same with lease

Ridwan Khairandy 65

Aircraft Operating Lease

65

Ridwan Khairandy 6666

67

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

Ridwan Khairandy 67

Ridwan Khairandy 68

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

Ridwan Khairandy 69

Mandate

The Mandatory

The Mandator

Third Party

Gives authority to represent or to perform on behalf of mandatory

To representthe mandatory

Ridwan Khairandy 70

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)

Ridwan Khairandy 71

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)

Ridwan Khairandy 72

The Sources of Representation

Representation

Stipulated by Statutory

Law

Stipulated by Agreement

Ridwan Khairandy 73

Sources of Representation

Minor Represented by his/her parent or guardian

Corporation Represented by director

These representations are stipulated by laws

Ridwan Khairandy 74

Sources of Representation

Mandatory Mandator

This representation is stipulated by power of attorney (mandate)

Power of attorney creates representation

Ridwan Khairandy 75

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

Ridwan Khairandy 76

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.

77

Principal (Producer) Agent

Buyer (consumers)

Mandate/Power of attorney

Commission

To sell on behalf of producer

77Ridwan Khairandy

Ridwan Khairandy 78

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

Ridwan Khairandy 79

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

Ridwan Khairandy 80

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

80

81

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

81Ridwan Khairandy

Ridwan Khairandy 82

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

82

Ridwan Khairandy 83

Ridwan Khairandy 84

Distribution Agreement

Seller Buyer Consumer

Producer Distributor

Products The products is sold

now, the products is own by buyer, then the products is sold by distributor to consumer

Ridwan Khairandy 85

Distribution Agreement

Seller Buyer

ProducerTo appoints buyers as distributor

Ridwan Khairandy 86

Relationship Between Producer and Distributor

Producer Distributor

Sale and Purchase Agreement

Re-seller

Ridwan Khairandy 87

Relationship Between Distributor and Consumer

Distributor Consumer

Sale and Purchase Agreement

Ridwan Khairandy 88

Essential Clauses in Distribution Agreement

• The appointment of distributor;

• The term of agreement;• The distribution territory;• The Producer/seller

guaranty; and• The distributor obligations

88

Ridwan Khairandy 89

Ridwan Khairandy 90

Beirdorp AG.Hamburg, Germany

PT Beirdorp Indonesia, Malang, Indonesia

Produce: Plaster (ban aid),

heating patch, etc

Trademark:Hansaplast

Intents to produce the same products under the same trademark

License Agreement1. Patent License Agreement;2. Trademark License Agreement;3. Trade Secret License Agreement;4. etc

Ridwan Khairandy 91

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

Ridwan Khairandy 92

Ridwan Khairandy

Management Contract

• There are two parties in the contract;

• They are owner and operator;• The hotel owned by the owner;• The operator owns the well-known

servicemarks, managements system, human resources who operate the management;

• The hotel is operated by operator

93

Ridwan Khairandy 94

Ridwan Khairandy 95

Franchise Agreement

Franchisor

Product

Marketing and Selling

1. Under one trademarks or Servicemarks;2. Under one systems;3. Under one standards

Ridwan Khairandy 96

Franchise Agreement

Franchisor Franchisee

Trademarks orServicemarks, etc

Technology

Business System

12

3

Business Management

MarketingSystem

intent to use technology, trademarks or servicemarks, and business system thatis developed by franchisor