Tuesday, March 12, 2013

Breach of Contract

A breach of contract often raises disputes in a business relationship. A well maintained business relationship for years could not guarantee that none of the parties would do any breach of the contract.

When a breach of contract happens, the business owner often does not understand what strategy to prepare. They wish to maintain the business relationship, yet the cash flow of the business gets adversely affected, or even could cause the business deteriorated.

Persuasion and negotiation are the common initial strategies taken in order to restore the situation. However, not all persuasion and negotiation could solve the dispute or reach the best solution.

In such case, a lawsuit should be considered to respond to the situation. The first step to draw the attention of the defaulting party is a warning letter issued by the lawyer/attorney, stating invitation for a meeting along with a warning to immediately make settlement in full or satisfy obligations under the agreement in concerned. Some pressures to the defaulting party may result in the fulfillment by the defaulting party of his obligations under the agreement.

In the situation where the defaulting party has habits of breaching an agreement or leaving his obligations unpaid, such party rarely takes into his consideration any warnings issued by the lawyer/attorney. His own reputation even is no longer under his consideration. In that case, filing a lawsuit (under civil law and/or criminal law) is strongly recommended in order to make such defaulting party satisfy his obligations under the agreement or make payment in accordance with the agreement.

Lawsuit pertaining to a breach of contract shall use the legal basis under the Indonesian Civil Code, among others Article 1243. A lawsuit brought at the District Court indeed is an effort to claim fulfillment of obligations under the agreement including any payments that have been stipulated in the agreement. If the breach is about payment obligation, the lawsuit could refer to fulfillment of principal payment obligation, interest in accordance with the prevailing regulation, or compensation for a loss.

In general, a loss could be a material loss or an immaterial loss. An immaterial loss has to do with the situation or condition of unsecured, uncomfortable and other similar situation or condition caused by the breach of the defaulting party.

In civil lawsuit, each of the disputing parties could be represented by the respective lawyer/attorney, without personally attending the trials. A valid Power of Attorney empowers the attorney- at- law to represent the client.

If there appears an indication of crime elements like deception, embezzlement, or falsification in such case, a prosecution for criminal charge could also be taken. Criminal act of deception, embezzlement and falsification are stipulated in the Criminal Code, among others in Articles 378, 372 and 263. Complaint or report could be made to the police. Upon completion of police investigation and completeness of the case documentation, the documentation will be delegated to the office of the counsel for prosecution, and further for the trial at the competent court.

If the alleged criminal act of deception, embezzlement, or falsification turns out to be proven, imprisonment could be sentenced.

Strategy, attention, and experience of the lawyer in handling such case would be the key factor for the accomplishment.

Said, Sudiro & Partners
Indonesian Attorneys at Law
Sampoerna Strategic Square
South Tower, Level 18
Jl. Jend. Sudirman Kav. 45 - 46
Jakarta 12930 Indonesia
Phone: (62-21) 575.0983
Fax: (62-21) 575.0803
Websites: www.ssplegal.com
P.O. BOX 8211 JKS.SB
Jakarta 12920

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