Conditions for the Validity of an Agreement

The conditions for the validity of an agreement are regulated in Article 1320 of the Civil Code. These conditions are:[1]

  1. Agreement of the parties
  2. Capacity of the parties
  3. Intention to create legal consequences
  4. Certainty
  5. Lawful cause

Standard Agreement

Although in principle based on the principle in Article 1338 of the Civil Code, everyone can make an agreement with agreed will or in a simpler sense this principle is referred to as the principle of freedom of contract.[2] Under the provisions of Article 1338 of the Civil Code, there are almost no transactions that cannot be carried out because each party can carry out transactions according to their own will, including all forms of modern transactions that are not or have not been accommodated in the prevailing laws and regulations.

However, the flexibility of Article 1338 of the Civil Code raises issues related to protection against the creation of unbalanced agreements. In an agreement made between creditor and debtor, for example, the debtor often has no choice but to accept an agreement presented by the creditor even though the various clauses in it are very detrimental to the debtor. Such an agreement is called a standard agreement.

A standard agreement is an agreement made and determined unilaterally by a business actor to be offered to consumers en masse. This agreement is usually printed and ready to be signed by the consumer.