Agreement Law: Definition, Legal Terms, Principles, and Various Kinds

Legal Understanding of the Agreement – There is a term regarding an agreement that reads “A promise is a debt” so when someone makes a promise, the promise must be kept because the weight is like a debt that must be paid. This also applies when someone starts a business or enters into an agreement in a business where if there is an agreement in the form of a business agreement, both parties must comply with the business agreement.

Being a business person is not as easy as people think because as a business person they have to think carefully before starting their business and especially if they want to collaborate with their business partners. There must be a mutual agreement before doing business with these partners in the form of a business agreement which usually contains every contract that has been agreed upon because if one of the parties violates it, legal action can be taken.

For this reason, the role of contract law in starting a business is very important to avoid possible violations committed with these business partners. In this discussion, we have summarized various information related to the understanding of contract law that Sinaumed’s friends can refer to as additional insight in studying a business and its relation to law.

You can see further discussion regarding contract law below!

Definition of Contract Law

A contract or agreement is an agreement between two or more people on certain matters that they have agreed upon. General provisions regarding contracts are regulated in the Indonesian Civil Code.

Ricardo Simanjuntak explained that the agreement is part of the understanding of the agreement, meaning that the agreement is also an agreement, although the agreement is not necessarily an agreement. Agreements that have binding legal consequences are equated with agreements. An agreement without legal consequences is not a contract. The basis for determining whether a contract has binding legal consequences or is only a contract with moral consequences arises from the basic will of the contracting parties.

Agreement law includes the general understanding of legal principles governing legal relations between two or more parties based on a valid agreement. Indonesian contract law continues to use the provisions of the Dutch colonial government as contained in Book III of the Civil Code.

Book III of the Civil Code adheres to an open system, meaning that the parties are free to enter into an agreement with anyone, determine the terms, validity and form of the agreement both in writing and orally. In addition, it has the right to conclude civil and non-civil contracts. This is also in accordance with Article 1338 paragraph (1) of the Criminal Code, which states: “Everyone who legally enters into a contract is governed by the law of those who enter into it.”

Hearing the word contract, at first glance we immediately think that it is a written agreement. In other words, agreement is considered in the narrow sense of agreement. In a broad sense, a contract is an agreement that regulates the relationship between two or more parties. Two people who vow to marry each other enter into a marriage contract; A person who chooses food in the market enters into a contract to buy a certain quantity of that food. The contract is nothing but the contract itself (a binding contract of course).

In Indonesian contract law, which still uses legal references from the former Dutch colonial government, the contract, namely Burgerlijk Wetboek (BW) is called overeenkomst, which in Indonesian means contract. One of the reasons why many contracts are not always equated with contracts is because contracts according to Article 1313 KUH do not contain the word “written contract”. The concept of agreement in article 1313 of the Criminal Code only mentions an act in which one or more people bind themselves to one or more people.

The Understanding of Agreement Law According to Experts

  • Sudikno

According to Sudikno, contract law is a contractual legal relationship between two or more parties that has legal consequences.

  • R. Subekti

An agreement according to R. Subekti is an event where one party makes an agreement with another party to carry out certain actions or things.

  • Prof. Wirjono prodjodikoro

Agreement according to Prof. Wirjono prodjodikoro, is a legal relationship, meaning that one person is obliged to do a certain thing and the other party has the right to claim that obligation in the law of the agreement.

  • R. Setiawan

According to R. Setiawan, contract law is an act of making an agreement between oneself and one or more people.

  • Abdulkadir

Agreement according to Abdulkadir, is an agreement between two or more people to manage something material.

  • KRMT Tirto Diningrat

An agreement according to KRMT Tirtodiningrat is a legal act based on an agreement between two or more parties, whose legal consequences can be met by the provisions of the applicable law.

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Legal Terms of Agreement Law

However, the principle of freedom of contract does not mean unlimited (absolute) freedom. Each party entering into an agreement must comply with the terms of a valid contract.

Article 1320 of the Civil Code regulates 4 legal requirements in contract law, namely:

  • Agreement of the parties

The agreement means that there is a voluntary agreement between the parties about the most important things that are desired in the agreement. In this case, there must be a free (voluntary) commitment between the parties, where consent can be expressly or tacitly stated. Free here means free from control, coercion and deception. However, the agreement ends according to Article 1321 of the Civil Code if the agreement is based on negligence, coercion, or fraudulent intentions.

  • Competence of the parties

According to Article 1329 of the Civil Code, anyone can in principle terminate the contract unless they are found to be legally incompetent.

  • About a specific problem

Certain things mean what the rights and obligations of both parties have agreed upon, at least the types of goods related to the contract are determined and these are goods that can be bought and sold.

  • For legal reasons

Because the contents of the contract itself which describes the goals achieved by the parties are legally valid. The contents of the agreement do not violate law, decency or public order

The contract agreement implies that the will of the parties making the agreement is consistent, so that there can be no coercion, domination and fraud (dwang, dwaling, bedrog) in the implementation of the agreement.

Legal competence as one of the legal requirements of an agreement presupposes that the parties to the agreement must be mature, physically fit and legally competent.

According to Article 1330 BW juncto Article 47 of Law Number 1 of 1974, a person is considered an adult, that is. he is 18 years old or married. If a person who is not of legal age wishes to enter into an agreement, he or his legal guardian may represent it. Meanwhile, people who are declared mentally healthy are not subject to guardianship according to Article 1330 and Article 433 BW.

Persons with intellectual disabilities can be represented by their supervisor or guardian. Conversely, a person who is not prohibited by law means that person is not bankrupt in the sense of Article 1330 BW of the Bankruptcy Law. There are special matters related to the subject of the contract, which means that the subject of the contract must be clear, distinct and measurable in nature and amount, permitted by law and within the limits of the parties.

Legal reasons mean that the contract in question must be made in good faith. According to Article 1335 BW, a contract made without reason is ineffective.

In this case the reason is the purpose of the contract. The agreement of the parties and the jurisdiction of the parties is a condition for the validity of a subjective agreement. If it is not fulfilled, the contract can be canceled, that is, as long as the parties do not terminate the contract, then the contract is valid. Certain things and halal reasons are a legal requirement for a substantive contract. If it is not fulfilled, the contract is cancelled, that is, it is considered that there was never a contract from the beginning.

In fact, many contracts do not meet the legal requirements of contracts in general, for example, contractual elements are carried out in a way that is different from the wishes of the parties to the contract.

At that time contracts were made which contained only the will of the other party. Such an agreement is called a standard agreement.

Principles in Contract Law

It is known that there are at least 12 (twelve) principles of rule in a contract law, including:

  • The principle of freedom of contract (freedom of contract)

Article 1338 paragraph (1) of the Civil Code states that:

“All legally formed agreements become laws for those who make them.”

This principle is a principle that places freedom on the parties to make:

  • Creating or not creating an agreement;
  • Enter into an agreement using anyone;
  • Choose the contents of the agreement, its implementation & terms;
  • Choose the form of the agreement whether written or oral.

But the freedom referred to in the Civil Code also cannot be interpreted that contracts can be freely formed without regard to the provisions of the applicable rules. Freedom in contracting is also permanent, it is obligatory to fulfill the legal conditions of the agreement so that it can be implemented.

  • Principles of Consensualism (consensualism)

Article 1320 paragraph (1) of the Civil Code has determined that one of the conditions for the validity of an agreement is the existence of a convention between the 2 parties.

  • Principle of Binding Strength (pacta sunt servanda)

This principle also refers to Article 1338 paragraph (1) of the Civil Code, where the parties will be bound to use the agreement that has been made like a law.

  • The Principle of Good Faith

This principle has been stated in Article 1338 paragraph (3) of the Civil Code which reads:

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“The agreement must be implemented in good faith.”

So that it can be concluded that, when creating the contract, the parties must also carry out the contents of the contract using good faith and intentions.

  • The Principle of Balance

This principle stipulates the existence of an equal or balanced bargaining position when creating an agreement on both parties.

  • Principle of Legal Certainty

This principle is a reflection of Article 1338 paragraph (2) of the Civil Code which states that parties to the agreement may not cancel the agreement unilaterally.

  • The Principle of Personality

This principle determines that a person who will carry out and or create a contract is only for the benefit of the individual. This is written in Article 1315 of the Civil Code & Article 1340 of the Civil Code which confirms that

“In general, a person cannot enter into an agreement or agreement other than for himself.”

The essence of this stipulation is clear that in order to enter into an agreement, the said person is obliged to fulfill his own interests.

  • Habit Principle

This means that the agreement must follow the norms that are commonly carried out, in accordance with the contents of Article 1347 of the Civil Code which reads that things that are based on the agreed norms are believed to be tacitly included in the agreement, even though they are not expressly stated. This is a manifestation according to the natural elements of the agreement.

  • Principles of Trust

Before entering into an agreement, the parties must be able to build a sense of trust between the parties so that in the future the parties can fulfill the obligations or delivery contained in the agreement.

  • The principle of propriety

The principle of propriety is one of the principles that is closely related to what is stated in the agreement and when an agreement is reached, the agreement creates a good sense of justice for the parties and justice in society. the principle of decency is explained in Article 1339 of the Civil Code.

  • Complementary Principle

According to the principle described in the third book of the Civil Code, no party can promise to revoke or deviate from legal provisions. In short, the party who promises will make his own terms in the contract, if not specified then the applicable legal terms will be used

  • Protection Principle

The purpose of the protection principle is for debtors and creditors who need legal protection, especially debtors, because debtors are usually in a vulnerable position.

Kinds of Agreements

Agreements can be divided into two groups, namely binding agreements and non-binding agreements.

A binding agreement is an agreement that obliges someone to deliver or pay for something. There are four types of binding agreements:

  • Unilateral agreements and reciprocal agreements

A unilateral agreement is an agreement that burdens the other party. Conversely, a reciprocal agreement is an agreement that burdens the performance of both parties.

  • Free Agreement and Load Agreement

A free agreement is an agreement in which one party provides benefits to another party without receiving any benefits for himself. While the load agreement is an agreement that requires performance by each party.

  • Consensual agreement, actual agreement and official agreement

A consensual agreement is a binding agreement after both parties reach an agreement. The actual agreement is an agreement that not only requires the agreement, but also the delivery of the object or objects of the contract. A formal agreement is an agreement that is subject to certain formalities, in this case according to the provisions of the applicable laws and regulations.

  • Named agreement, Anonymous agreement, and Mixed agreement

Agreements marked with names are regulated separately by law. An anonymous agreement is an agreement that is not specifically regulated by law. Meanwhile, a mixed agreement is an agreement that is a combination of two or more named agreements.

While non-binding agreements are agreements that do not oblige someone to surrender or pay for something, and are divided into four:

  • Zakelijke overeenkomst, namely an agreement that determines the transfer of a right from one person to another.
  • Bevifs overeenkomst, namely an agreement to prove something.
  • Liberatoir overeenkomst, namely an agreement when someone releases another party from an obligation.
  • Vaststelling overeenkomst, namely an agreement to end a dispute that is before the court.


This is a brief discussion of the definition of contract law. The discussion this time does not only discuss the definition of contract law, but also discusses further how the terms are valid in an agreement, the legal principles, and the various types of agreements that Sinaumed’s friends can look at carefully.

Understanding the meaning of contract law gives us additional knowledge about the various laws that apply in an agreement and how the procedure for an agreement along with the legal terms and legal principles that apply in making an agreement by a worker or business person in agreeing on an agreement made between the two parties to make a mutual agreement.

Thus a review of the understanding of contract law. For Sinaumed’s who want to learn everything about the meaning of contract law. And other law-related knowledge, you can visit to get related books.

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Author: Pandu Akram