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10 REASONS CAN LEAD TO THE TERMINATION OF YOUR AGREEMENT

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Any agreement made legitimately by the parties is basically valid as law for those who are bound by it. It is a basic principle of contract law, unless at a later time, after the agreement has been signed, some facts that affect the validity of the agreement occur. An agreement cannot be withdrawn or canceled, unless there is an approval from the parties who are bound to it. Or,  it may be due to reasons permitted by law. Indonesian Civil Code (KUH Perdata) at least manages 10 reasons of termination agreement, namely:

    1. Concerning Payment

In this case the debtor has to perform its obligations in accordance with what has been promised to the creditors, either by paying a sum of money or delivering goods that have been promised. The payment can also be interpreted as repayment since the settlement of debts owed to the debtor then the agreement comes to an end.

  1. Concerning an Offer of Immediate Payment Followed by Consignment or Custody

    If the creditor refuses to accept payment, the debtor may offer an immediate payment of the debt, and if the creditor also refuses to accept such payment, a sum of money or goods may be deposited to the Court. The Court is referred to the court which has been appointed by the parties in the agreement, and it has been agreed upon in advance.

  2. Concerning Debt NovationDebt novation is one of the issues that can lead to the termination of the old agreement and at the same time can settle a new agreement. The new agreement is to replace the old agreement. If for the benefit of the creditor, the debtor enters into a new debt obligation that substitutes and extinguishes the original debt. The change of creditor or debtor, based on a mutual agreement, also belong to the category of debt novation.
  3. Concerning Compensation or Debt Setoff Debt setoff occurs by operation of law to a situation when two people are owed to one another. For example: A has debts of Rp.1.000.000, to B. On the contrary, B has debts of Rp.1.500.000, – to A. For the sake of the law, there has been a meeting of debt, so that A only has to pay debts of Rp.500.000, – as a debt payment obligation to B
  4. Concerning Debt ConsolidationWhen one person acquires both debtor and creditor statuses at the same time, a consolidation of debt takes place by law and as a result, such debt is extinguished.

    One of the examples is when a father (creditor) lends some money to his son (debtor). When the creditor dies, the debtor shall be located as the heir of the creditor, who receives an inheritance from the testator. Then the heir who initially serves as a debtor automatically according to the law takes the place of the testator as a creditor, including debts to himself. In such a case, the agreement of debts between the father and his son is automatically ended by law.

  5. Concerning the Relief from a DebtThe relief of a debt or the release granted pursuant to an agreement for the benefit of one of the co-debtors who are severally liable, is release all the others, unless the creditor expressly reserves his rights with respect to the latter mentioned.For example if A together with B, C and D have a debt of Rp.3.000.000,- it is severally liable. Then A releases to B all the debts that he has on A. Basically, by law, the relief of a debt also applies to C and D. Unless if there is an assertive statement stated by A on the contrary.
  6. Concerning the Destruction of the Assets OwedIf the assets owed are destroyed, become unmerchantable or are lost through no fault of debtor, the debtor is required, if he has any rights or claims for recourse related to these assets, to assign them to the creditor.
  7. Concerning the Invalidity It relates to the fulfillment of the legitimate requirements of an agreement as defined in Section 1320 – 1337 of the Civil Code, namely the subjective requirements and objective requirements. Non-fulfillment of objective requirements (agreed and ability of the parties) give the rights to the party who feel aggrieved to apply for cancellation of the agreement. While the non-fulfillment of objective requirements (a certain thing and the object of kosher) resulted in the agreement is null and void. The cancellation needs to be submitted to the completion of the forum (court or arbitration) designated in the agreement that has been agreed by the parties.
  8. Concerning Validity of a Void ConditionIt is closely related to the conditional agreement agreed by the parties, namely the end of an agreement due to the occurrence of certain issues that have been specified in the agreement.
  9. Concerning Prescription The deadline to file a lawsuit on the fulfillment of achievement based on an agreement is 30 years starting from the onset of these rights.

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