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 cant 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 agents activities, or if the contract is within the agents
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.: hes 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 creditors place
- At the debtors 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.