Formation of Contract and Stipulations for Third Parties in Indonesia
Indonesia is one of the most legally diverse and complex countries in the world. It practises legal pluralism with three types of contract law in force: adat (customary) contract laws, Islamic contract laws (mostly concerning banking), and the European civil law of contract, transplanted from the Netherlands in 1847, found mainly in the Civil Code (Kitab Undang-Undang Hukum Perdata). This chapter focuses on European civil law as it is the law used for the majority of commercial transactions. The civil law of contract is not well developed and there is a paucity of indigenous doctrine and jurisprudence, since most significant commercial disputes are settled by arbitration. The contours of the law are consistent with the French/Dutch legal tradition. In the formation of contracts, the subjective intention of the parties plays a greater role than in the common law. As with most jurisdictions with a Napoleonic tradition, the offer must include all the essential element of the contract, there is no concept of ‘invitations to treat’ or of ‘consideration’, the common law posting rule is rejected, and the contract is formed only when the acceptance is received. There are generally few requirements of form but some contracts must be in writing and some in a notarial deed.