Legal Literacy- In Indonesian contract law, a legally made contract applies as law to the parties who make it. This principle (pacta sunt servanda) is known as the principle of freedom of contract, as regulated inArticle 1338 paragraph (1) of the Civil Code. The contract is also binding and exclusive, meaning "Agreements only apply between the parties who make them" (Article 1340 of the Civil Code). However, in order for an agreement (contract) to be declared valid and have legal force, it must meet four (4) fundamental conditions.

4 Valid Conditions of Agreement According to Article 1320 of the Civil Code

In a contract, an agreement must meet four conditions to be valid, namely:
  1. The existence/achievement of agreement (Agreement).
  2. The parties have legal capacity/competence (Capacity).
  3. The object agreed upon is clear (There is a certain thing).
  4. There is a lawful cause (Lawful Cause).
These four conditions are further divided into two important categories that determine the legal consequences.

Subjective Condition (Voidable)

The conditions in points 1 (Agree) and 2 (Capable) aresubjective conditions, because they relate to the subject or person making the agreement.
  • Legal Consequences: If the subjective conditions are not met (for example, there is coercion or one of the parties is a minor), then the agreement is voidable (voidable). This means that the agreement remains valid as long as no party files for cancellation with the court.