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Law of Contract
Law of Contract
CONTRACT
Definition
• A contract is an agreement entered into voluntarily by two parties or more with the
intention of creating a legal obligation.
• A contract is a legally enforceable promise or undertaking that something will or will not
occur. The word promise can be used as a legal synonym for contract.
• The parties may be natural persons or juristic persons (legal entity).
• The remedy for breach of contract can be “damages” (kerugian akan kerusakan) or
compensation of money. In equity, the remedy can be specific performance of the
contract or an injunction. Both of these remedies award the party at loss the “benefit or
the bargain” or expectation.
• A contract is nothing other than a voluntary private agreement to exchange valuable
things. It most often is an exchange of valuable promises. For example, a home-buyer
might promise to pay $250.000 to the seller, who in exchange promises to deliver
unencumber title to the buyer.
Definition
• Contract law is based on the principle expressed in the Latin phrase pacta
sunt servanda, which is usually translated “agreements must be performed”
but more literally means “pacts must be kept/respected/performed”.
Legally it means that a contract becomes a law for the parties. So, it is
binding to the parties.
• A contract is a legally enforceable agreement between two or more parties.
The core of most contracts is a set of mutual promises (in legal terminology,
“considered”). The promises made by the parties define the rights and
obligations of the parties.
• Contracts are, in a sense, private law created by the agreement of the
parties. The rights and obligations of the parties are determined by the
contract’s terms, subject to limits imposed by relevant statutes,
Definition
• Contract are enforceable in the courts. If one party meets it contractual obligations
and the other party doesn’t (“breaches the contract”), the nonbreaching party is
erected to receive relief through the courts.
Example: Developer promised to pay Graphic Designer IDR 50,000,000.00 for
creating certain promotional materials for Developer's multimedia work. Graphic
Designer created the materials and delivered them to Developer, as required in the
contract. Developer admits that the materials meet the contract specifications. If
Developer does not pay Graphic Designer, Graphic Designer can go to court and get
a judgment against Developer for breach of contract.
• A contract comes into existence [1] one party make an offer their the another
party accepts, and [2] the parties there by agree to exchange valuable benefits on
specified terms and conditions, with reasonably specific agreement on the price,
place, time, the goods or services to be delivered, and the other essential terms of
the exchange.
Definition
• Because contracts are enforceable, parties who enter into contracts can rely
on contracts in structuring their business relationships.
• Example: Developer entered into a contract with Composer, promising to pay
Composer IDR 4,000,000.00 for composing a brief composition for
Developer's multimedia work. Shortly after Composer started work on the
piece for Developer - before Developer paid composer any money -
composer got an offer from a movie studio to compose all the music for a
movie and abandoned Developer's project. Developer had to pay another
composer IDR 6,000,000.00 to do the work that composer had contracted to
do. Developer can sue the composer and obtain a judgment against the
composer for IDR 2,000,000.00 (the amount that will result in Developer's
obtaining the music for a net cost of IDR 4,000,000.00 (the contract price).
Contract:
A Contract is an agreement which legally binds the parties.
Sometimes contracts are referred to as “enforceable
agreements”. This is misleading since one party cannot usually
force the other to fulfill his part of the bargain. The usual remedy
is damages.
The underlying theory is that a contract is the outcome of
“concenting mind”, each party being free to accept or reject the
term of others.
Human interaction/relationship
The basis for a contract Certain interest in the relationship such as
Public, Social, dan privat interest
Legal implication (legal relation that creates
right and obligation)
Mutual interest between/among the parties on
the basis of mutual dependence
The Legal relation is formalized for creating
legal protection and legal certainty.
Elements of Contract
A contract is formed when one party (the "offeror") makes an offer which is accepted by the other party
(the "offeree"). An offer - a proposal to form a contract - can be as simple as the words, "I'll wash your
car for you for IDR 50,000.00." An acceptance - the offeree's assent to the terms of the offer - can be as
simple as, "You've got a deal." Sometimes acceptance can be shown by conduct rather than by words.
When an offer has been made, no contract is formed until the offeree accepts the offer. When you make
an offer, never assume that the offeree will accept the offer.
Contractual liability is based on consent.
Example: Developer offered to pay a Photographer IDR 5,000.00 to use Photographer's photo in
Developer's multimedia work. Photographer said, "Let me think about it." Developer, assuming that
Photographer would accept the offer, went ahead and used the photo. Photographer then rejected
Developer's offer. Developer has infringed Photographer's copyright by reproducing the photograph for
use in the multimedia work. Developer must now either remove the photo from the multimedia work
before distributing the work (or showing the work to others) or reach an agreement with Photographer.
When you are an offeree, do not assume that an offer will remain open indefinitely. In
general, an offeror is free to revoke the offer at any time before acceptance by the
offeree. Once the offeror terminates the offer, the offeree no longer has the legal
power to accept the offer and form a contract.
Example: Animator offered his services to Developer, who said, "I'll get back to you."
Developer then contracted with Client to quickly produce a multimedia work involving
animation (making the assumption that Animator was still available to do the
animation work). Before Developer could tell Animator that he accepted Animator's
offer, Animator sent Developer a fax that said, "Leaving for Mexico. I'll call when I get
back." Developer and Animator did not have a contract. Developer should not have
assumed, in entering into the contract with Client, that Animator was still available.
When you are the offeree, do not start contract performance before notifying the
offeror of your acceptance. Prior to your acceptance, there is no contract. An offer can
be accepted by starting performance if the offer itself invites such acceptance.
Where a product in large quantities is advertised in a newspaper or
on a poster, it generally is not considered an offer but instead will be
regarded as an invitation to treat, since there is no guarantee that the
store can provide the item for everyone who might want one.