Breach of Contract and the Sanction in Agreements to Outsource by the Government: Juridical Analysis of Article 1601 B of the Indonesian Civil Code

Abstract

In the historical record from Babylon, namely the oldest Code is called Code Hammurabi, outsourcing and construction agreements have been set out. A construction agreement can be executed well if the parties have fulfilled their respective obligations as agreed, but sometimes an agreement cannot be executed well as a result of breach of contract, making it vulnerable to the risk of unilateral contract termination. However, in practice, the parties often include a clause in the agreement that they agree to relinquish or waive the provisions of Article 1266 paragraph 2 of the Indonesian Civil Code and, as a result, in the event of breach of contract, the agreement shall be null and void. The terms and conditions of a particular agreement may be deemed inappropriate or unfair if the agreement is established based on an unbalanced relationship. The problem is how the Principle of Legal Protection applies to the injured party in a construction agreement and how Legal Protection applies to the Parties to a contract containing a clause specifying a waiver of Article 1266 of the Indonesian Civil Code? To discuss the issues above, descriptive-analytic research was undertaken by describing and reporting in detail, systematically, and comprehensively everything related to breach of contract in the execution of work agreements undertaken by the Contractor. The research design was implemented using the Normative Juridical approach, i.e. research referring to legal norms set out in the applicable laws and regulations as a normative basis. Findings of the research suggest that in the construction agreement, in case of breach of contract, then to the the injured party shall apply the principles of protection, namely the "exceptio non adimpleti contractus” principle which means that the parties can refuse to fulfill their obligations or refuse to fulfill their obligations; the subsequent Principle of Refusal To Fulfill Obligations comes from the counter party, the Principle of Demanding Restitution which means that if the party that has fulfilled obligations shall be entitled to demand restitution from the counter party, namely to demand that to the party concernedeach obligation the party has fulfilled shall be returned or paid. Settlement of disputes can be reached in two ways, namely by taking them to the court or having them settled out of court. Based the agreement between the parties as specified in the contract, it is recommended that construction agreements should be made in two directions, i.e. between the employer and the employee, in order to avoid the impression that only the employer has a higher position than the employee, thus creating a balanced relationship.