Contract Law, Contract is legal conducts based on agreement to create

legal consequences and a legal relationship consisting of the rights and duties of

the contracting parties, and also a promise or set of promises constituting an

agreement between the parties that gives each a legal duty to the other and also

the right to seek remedy for the breach of those duties.

Contract have four elements are required:

1. The consent of the parties

To be valid the parties must consent to the basic matters contained in the

agreement. A contract may be valid even though consent was obtained by:

a. Duress: any mental intimidation not approved by law.

b. Mistake: a misapprehension to a subject matter or person in the

formation of the agreement

c. Fraud: an overt act performed by one of the parties prior to the

formation of the agreement with the intention to deceive the other party

and induce him into concluding which he would not otherwise has

concluded.

In such situation there is said to be consent, and therefore a valid contract,

even though the consent obtained is suspicious manner. However, a

contract thus obtained is voidable, upon application by; the victim of

duress, mistake or fraud

2. A capacity to contract

For this capacity all persons are legally capable of entering contracts,

except:

a. Minors (person under 21 years of age). There is presently a difference

of opinion whether the coming age is becoming 21 years or 18 years.

b. Persons placed under guardianship

Further more, contracts concluded by either of these categories of persons

can be annulled by a court law, upon application of incapable party or his

 

lawful representative, provided the action is brought within five years of

the termination of the incapacity

3. A subject certain

The subject of the contract must be determinable otherwise the contract is

void, must be object in trade, then by “subject” is meant both the object of

the performance (for example the goods that are to be delivered), and the

performance itself (for example, the delivery)

The subject of the contract may be right, services, goods or things,

whether in existence or to come into existence, as long as they are

determinable

4. A lawful purpose

To be valid the contract must have a lawful purpose “causa” If the object

of the contract is unlawful, or if it is contrary to good morals or public

policy, then the contract is void.

Contract is created at the moment a legitimate offer has been accepted.

The offer and acceptance can be expressively or tacitly. Formalities for the

validity of contracts as a general rule no formal requirements (writing,

registration, etc) need to be observed to make a contract binding. legitimate offer

is irrevocable unless a power to revoke has been reserved. If the offer is not

accepted during the period of its validity, it terminates automatically at the end of

that period. If the offer has no specified duration, it is deemed made for a

“reasonable” time, which period varies according to circumstances, but not all

offers are legitimate The exemptions: certain contracts must be in writing and

executed in the form of an authenctic deed made by a notary or other authorized

public official.

We also have principles of contract which are:

1. Consesualism Principle, related to when the contract created, mutual

consent between both parties, and contract is created eversince, the is a

 

mutual consent, for a contract to be valid the parties must consent to

the basic matters contained in the contract.

2. Pacta Sunt Servanda, related to the consequence of the contract, the

contract is applied as a statute for the parties then parties who made a

contract are bound to the contract. In this principle there is sanction for

breaching the contract, both parties can’t revoke the contract, without

prior a judge has to respect the contract.

3. Good Faith Principle, we have two kinds of good faith refering to

article 1338 par. 3, which are good faith in a subjective sense: the

sincerty of a party in the beginning of the contract and good faith in an

objective sense : implementation of the contract must be based on the

equity (reasonableness) and ethics. It is more to the things (condition)

outside of the person. In objective sense is meant “If general opinion

considers that such action is contrary to the good faith” a creditor who

claims his rights at the most unfavourable moment for the debtor with

knowledge of the circumstances, shall be considered to act in bad faith.

4. Personal Principle, Related to a subject who is bound in the contract,

only applies to the contracting parties, the Code provides that no one

except the parties to a contract may be bound or benefited by an

obligation undertaken by them in the contract. The exception of this

principle : it is possible a contract for the benefit of a third person and

for the third person to acquire enforceable rights under a contract even

though he is not a party in the contract. This is done merely by

stipulating that the agreement should benefit a designated third person,

and then having the third party beneficiary ratify the stipulation before

it is revoked.

Types of Contract in General:

I. Conditional Contract

 

a. Conditional Contract: The validity of the contract depends on the

occurrence of a specific future event. (Exp.: Insurance agreement)

b. Temporal contracts: The contract will terminate when a certain

date has been reach. (Ex. Labor contract for a certain period)

c. Alternative contracts: The debtor is released by delivery of one of

the two objects. (Pay the debt in the form of money or goods)

d. Contracts with joint and several liability: Several debtors are liable

to a single creditor (Partnership Contracts)

e. Divisible and indivisible contracts

f. Contract with a penalty clause

II. Special Contract

a. Sales Contract

b. Hire Purchase Contract

c. Contract of Installment Purchase

d. Contract of Lease

e. Surety Contract

f. Agency

The mandate (lastgeving; pemberian kuasa) is a contract in which one

person, the principal gives to another, the mandatory, a power to execute a jurist

act in his name. The term mandate refers as well to agencies which are not

accompanied by representation – e.g. the contract of “prete-nom”, by virtue of

which the agent will act on behalf of another but in his own name without

revealing the existence of his mandator

Obligations of Mandatory:

- to execute the mandate

- to compensate his principal if he fails to do so, and,

 

- to render an accounting of his acts

Obligations of the Principal:

- to indemnify his mandatory

- to pay his salary, and

- to execute whatever obligations have been contracted in his name

Termination:

Several ways in which a mandate can be extinguished:

1) Revocation by the principal

2) Renunciation by the mandatory (penolakan)

3) Death of the principal or agent

4) Bankruptcy of principal or agent

5) Interdiction of principal or agent (pemutusan)

6) Marriage of a female principal or agent

Commercial Mandates:

1) Commercial Agent Generally:

- Commercial agent is any person who makes a business of acting as an

intermediary, or entering into contracts for the order of and on behalf on a

principal

- Commercial agent is entitled to compensation as soon as the contract is

concluded, unless performance of the contract is made a condition of payment

in the mandate

 

- He is also entitled to a commission on contracts entered into directly by the

principal and third party if the coming together of the principle and third party

is a result of the agent’s activities, or if the contract is within the agent’s

exclusive subject.

- The agent is due a commission whenever he is willing and able to execute

his mandate but is prevented from doing so by the principal

2) Brokers:

- A broker is a licensed mandatory who acts in the name of, and for the order

of, a principal for the purpose of buying and selling goods, but he is never

entrusted either with possession or control of the goods involved

- Indeed, the broker is prohibited from having any interest whatever in the

transaction which he is licensed to execute

3) Commission Merchant:

- The commission merchant enters contract in his own name, at the order and

for the risk of his principal. He is thus acts without a representation, and so

binds himself rather than his principal.

- The commission merchant acquires possession of the goods involved

- The relationship between commission merchant and principal is like that of

a ordinary commercial agent and principal, except that the commission

merchant acquires several special privilege which the Commercial Code

authorizes. Ex.: he’s given stronger liens the property he is authorized to sell or

buy.

Payment, Not only the delivery of monet but also the performance, in any other

manner, of an obligation. Can be made not only by person who is interested in the

payment, such as co-debtors and guarantors but also by a third person who is not a

party, he is acting on behalf of the debtor or if he acts on his own behalf he does

 

not subrogate to the rights of the creditor. Valid payment : the debtor (the payer)

should be the owner of the goods given in payment. Subrogation can only be

effected by consent of the debtor or by stipulation of the law in special cases.

Payment Method

To whom the payment is made : -to the creditor

-to the person who is authorized by the

creditor.

-to the person who is authorized by the

judge.

Where: - place where is agreed in the contract

- place where the object is kept when the contract takes place.

- At the creditor’s place

- At the debtor’s place.

When: - Civil code doesn't set when the payment should be made,

therefore it is according to what it is written in the contract.