Function of Agreements

Functions of agreements include:

  • Affirming the rights and obligations of the parties
  • Providing legal certainty
  • Facilitating dispute resolution

Examples of Agreements

Examples of Agreements in daily life include:

  • Sale and purchase agreement
  • Lease agreement
  • Employment agreement
  • Credit agreement

When Does an Agreement Become Effective and Terminate?

Entry into force of an agreement:

  • Written Agreement:
    • Since it is signed by all competent parties (adult and mentally sound).
    • The effective date is specified in the agreement
  • Verbal Agreement:
    • Since an agreement is reached between all competent parties

Termination of an agreement:

  • Fulfillment of the agreement's purpose: Example: in a sale and purchase agreement, the agreement ends after the buyer receives the goods and the seller receives payment.
  • Lapse of the specified time: Example: in a lease agreement, the agreement ends after the lease period ends.
  • Cancellation of the agreement: Cancellation can be carried out by one of the parties or by mutual agreement; Reasons for cancellation: default, mutual agreement, or other legitimate reasons.
  • Merger or consolidation of parties in the agreement: Example: two companies that merge, then the agreement made by one of the companies will end.
  • Changes in legislation: If the legislation underlying the agreement changes, the agreement may terminate.
  • Court decision: The court may decide to terminate the agreement if there is a default or other legitimate reason.