Dissecting 'Offer' & 'Acceptance': Understanding the 4 Valid Conditions of an Agreement (Article 1320 of the Civil Code)

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

4 Legal Requirements of an Agreement According to Article 1320 of the Indonesian Civil Code

Within 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 (The existence of a specific matter).
4. Existence lawful cause (Lawful Cause).

These four conditions are further divided into two important categories that determine the legal consequences.

Subjective Requirements (Voidable)

The conditions in points 1 (Agreement) and 2 (Capacity) are subjective 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.

Objective Requirements (Null and Void)

The conditions in points 3 (Clear Object) and 4 (Lawful Cause) are objective conditions, because they relate to the object or content of the agreement itself.

• Legal Consequences: If the objective conditions are not met (for example, the object is in dispute or the contract is to commit a crime), then the agreement is null and void (null and void). The contract is deemed to have never existed from the beginning.

Focus: 'Offer' and 'Acceptance' in the Formation of an Agreement

The first condition for a valid agreement is "Agreement". In Article 1320 of the Indonesian Civil Code, agreement is the moment of meeting between an offer (offer) from one party (offeror) and acceptance (acceptance) from the other party (offeree). This moment is the basis for the emergence of rights and obligations for the parties.

• Offer (Offer): This is a desire submitted by offeror to offeree for a specific offer. The offeror must have the desire and willingness to be legally bound if the offer is accepted.
• Acceptance (Acceptance): This is a response or statement of agreement from offeree towards offer that has been submitted. If offeree agrees (accepts unconditionally), then an agreement (agreement) is reached and a contract is formed.

How to Accept an Offer?

The procedure for responding (acceptance) can be done by following the instructions that may have been specified by offeror in its offer letter. Clarity regarding the offered item and awareness of the legal consequences are very important. This is in line with Article 1342 of the Civil Code, "If the words of an agreement are clear, it is not permissible to deviate from them by way of interpretation."

Comparison with the Common Law System

When compared to the common lawsystem, the requirements for a valid contract differ slightly in emphasis, although the essence is similar:

1. There must be an offer (Offer).
2. There must be acceptance (Acceptance).
3. The contracting parties must have Capacity.
4. There must be Consideration (reciprocal performance, something of value that is exchanged).
5. Existence Lawful Cause (A lawful cause).
6. There must be Intention to create legal relation (Intention to be legally bound).

In contrast to the Civil Code which combines it within "agreement", Common Law explicitly establishes it offer and acceptance as a separate element.

When Does an Offer (Offer) Become Effective?

International principles regarding contracts (UNIDROIT Principles of International Commercial Contracts) clarify when an offer becomes binding.

Article 2.1.2 (Principle): A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in the case of acceptance. (A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in the case of acceptance.)

Article 2.1.3 (Principle): (1) An offer becomes effective when it reaches the offeree. (2) An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer. (An offer becomes effective when it reaches the offeree. An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.)

This principle affirms that as long as it offer has not been accepted, the offeror may modify or revoke it. However, if offer has been received (acceptance), a contract has occurred and cannot be unilaterally revoked.

Criteria of an Offer According to Legal Experts

To categorize a statement as offer that will create a contract, experts provide clear criteria. According toHenry R. Cheeseman

1. , there are three important measures:
2. The terms of the offer must be definite or reasonably certain.
3. The offer must be communicated to the offeree.

A more precise definition is explained by J. Beatson in Anson’s Law of Contract:

An offer is an intimation, by words or conduct, of a willingness to enter into a legally binding contract, and which in its terms expressly or impliedly indicates that it is to becoming binding on the offeror as soon as it has been accepted...

Closing

Understanding the four legal requirements of an agreement according to Article 1320 of the Indonesian Civil Code—especially the "agreement" process formed from offer and acceptance—is crucial. Failure to meet any of these conditions, whether subjective or objective, may result in the contract being voidable or even null and void by law.