Valid Conditions for an Agreement Not Required to Be Written

Legal Literacy - In Indonesian civil law, the validity of an agreement is regulated in Article 1320 of the Civil Code (BW). This article stipulates four main conditions that must be met in order for an agreement to be considered valid and binding on the parties involved. However, one of the common misconceptions is that an agreement must be made in written form in order to have legal force. In fact, based on civil law provisions, written form is not an absolute requirement for the validity of an agreement.

Legal Requirements for Agreements

Article 1320 of the Civil Code stipulates four conditions for the validity of an agreement, namely:

1. Agreement of the parties

   • The agreement must be based on the consensus or free will of the parties involved. This agreement must not be obtained through coercion, error, or fraud.

2. Capacity to enter into an agreement

   • The parties entering into an agreement must have legal capacity, i.e., be of legal age (at least 18 years old or married) and not be in a condition that causes legal incapacity, such as being under guardianship.

3. A specific object

   • The agreement must have a clear and definable object, whether in the form of goods or services agreed upon.

4. A lawful cause

   • The agreement must not conflict with the law, public order, or morality. If the cause of the agreement violates these provisions, the agreement becomes null and void by law.

Article 1320 of the Civil Code (BW) does not state that an agreement must be made in writing to be considered valid. In other words, an oral agreement is actually valid as long as it meets the four conditions above. For example, a sale and purchase agreement made orally between two parties still has legal force, provided that there is an agreement, the parties have legal capacity, the object is clear, and the purpose does not conflict with the law. However, although oral agreements remain valid, written agreements are still recommended in legal practice to provide strong evidence in the event of a dispute in the future.

Types of Agreements Required to Be Written

Although agreements are generally not required to be in written form, there are some types of agreements that, based on laws and regulations, must be made in writing in order to have legal force. Some examples of agreements that require written form include:

1. Agreements of a formal nature

   • Certain agreements, such as land sale and purchase agreements (Article 1879 of the Civil Code), marriage agreements (Article 29 of the Marriage Law), and bank credit agreements, must be made in writing or even in a notarial deed to be legally valid.

2. Agreements required by law to be made in writing

   • Some specific regulations require written form, such as in property sale and purchase transactions, which must be stated in a sale and purchase deed (Akta Jual Beli/AJB) before a notary or Land Deed Official (Pejabat Pembuat Akta Tanah/PPAT).

3. Agreements with large transaction values or involving many parties

   • In business practice, written agreements are preferred to ensure legal certainty and minimize potential disputes.

Article 1320 of the Civil Code stipulates the conditions for the validity of an agreement but does not require the agreement to be made in writing. Thus, an oral agreement is still considered valid as long as it meets the conditions of agreement, capacity, a specific object, and a lawful cause.

However, in legal practice, written agreements are still recommended to avoid difficulties in proving a case if a dispute arises. In addition, some types of agreements are required by law to be made in writing, especially those concerning land rights, marriage, and large-value transactions. Therefore, a proper understanding of the conditions for a valid agreement is very important for the public to be able to make and execute agreements correctly in accordance with applicable law.