Legal Literacy - Understand legality Sale and Purchase Agreement with repurchase rights. Discover the risks and alternative solutions that are safe and legal. Avoid defective agreements and learn the difference between them and debt agreements.
Sale and Purchase
Sale and purchase in law positive law in Indonesia is contained in the Civil Code. The definition of sale and purchase based on Article 1457 Civil Code explains that a sale and purchase is an agreement, where one party binds itself to hand over an item and the other party binds itself to pay the price that has been agreed upon.
Generally, a sale and purchase that occurs in society in general is when the seller has carried out their obligation by handing over the object they are selling and the buyer carries out their obligation by making payment for the price that has been agreed upon with the seller. In the case of land sales, if there is an agreement to carry out a land sale and purchase, the legal product produced is the creation of a Deed of Transfer of Rights Agreement and a Sale and Purchase Deed as a form that the seller has carried out their obligation to hand over the object of sale and purchase. However, in practice, there are sale and purchase events that are carried out not in accordance with what usually happens.
What if there is a sale and purchase agreement with a repurchase right?
A sale and purchase agreement with a repurchase right is contained in Article 1519 of the Civil Code, which explains that the power to repurchase goods that have been sold arises because of an agreement, which still gives the seller the right to take back the goods sold by returning the original purchase price and providing the compensation referred to in Article 1532.
However, after the enactment of Law Number 5 of 1960 concerning Basic Regulations on Basic Agrarian Principles (UUPA), all provisions regarding national land matters must refer to Law Number 5 of 1960 concerning Basic Regulations on Basic Agrarian Principles (UUPA). So that the provisions regarding land law contained in the Civil Code are no longer valid, this also includes the rules regarding the right to repurchase contained in Article 1519 of the Civil Code cannot be applied to land sales.
The national land law that applies in Indonesia after the enactment of Law Number 5 of 1960 concerning Basic Regulations on Basic Agrarian Principles (UUPA) is Customary Law, which in Customary Law does not recognize sale and purchase with repurchase rights.
The definition of an agreement is contained in Article 1313 of the Indonesian Civil Code, which explains that an agreement is an act by which one or more parties bind themselves to one or more other persons. In other words, an agreement creates an engagement or an agreement is one source of engagement. An agreement must then be followed by applicable legal rules, namely based on Article 1320 of the Indonesian Civil Code. Article 1320 of the Indonesian Civil Code stipulates that in order for an agreement to be valid and binding, the agreement must meet subjective and objective requirements. Subjective requirements are requirements related to the parties making the agreement, namely:
- Agreement of those who bind themselves. The agreement itself is defined as a similarity of will from the parties making the agreement.
- Capacity to create an engagement agreement of those who bind themselves;
Whereas objective requirements are requirements regarding the object of the agreement, namely:
- A specific matter that is, every agreement must have a specific object that can be determined in quantity, type and/or extent.
- A lawful cause or a permissible cause. Based on Article 1337 of the Indonesian Civil Code, prohibited agreements are agreements that are contrary to public order and morality or mandatory laws and regulations.
An agreement may not be made if it is based on a false or prohibited cause as stipulated in Article 1335 of the Indonesian Civil Code. A prohibited cause is also regulated in Article 1337 of the Indonesian Civil Code. One example of a sale and purchase agreement based on a false or prohibited cause is a sale and purchase agreement with the right to repurchase. A sale and purchase agreement with the right to repurchase is an agreement made not based on Article 1320 of the Indonesian Civil Code. This is as per the Jurisprudence of the Supreme Court Decision Number: 1729 K / Pdt / 2004 which essentially states that: “A Sale and Purchase Agreement with the right to repurchase is a disguised or sham debt agreement.”
And in the Jurisprudence of the Supreme Court Decision Number: 3597 K / Pdt / 1985 it is also stated that:“Sale and purchase with the right to repurchase is a form of agreement according to Article 1519 et seq. of the Civil Code (BW), while the sale and purchase of land / houses in accordance with the Basic Agrarian Law is controlled by Customary Law, and based on jurisprudence, customary law does not recognize the form of sale and purchase with the right to repurchase, therefore the agreement between the plaintiff and the defendant as stated in the evidence letters P.I, P.2 and P.3 (all with the same date) is null and void by law.”
A disguised or sham agreement contains a false causa or a pro forma agreement (pretended agreement) because there is a discrepancy between the statement and the will, such as a debt agreement that uses a Deed of Transfer of Rights Agreement as collateral. Thus, the Deed of Transfer of Rights Agreement is made to conceal the actual causa. By concealing the actual causa, the agreement creates a defect that violates the provisions of the validity requirements of the agreement based on Article 1320 of the Civil Code. The defect in question is a defect of will, namely an agreement that is not based on the pure will of the debtor, in other words, the debtor does not want to sell the object being pledged.
A sale and purchase agreement with the right to repurchase can occur when one party is indebted to another party. In order to provide binding certainty and confidence to the lender, the debtor provides collateral in the form of an object, which is then stated by the lender in an authentic deed, namely the Deed of Transfer of Rights Agreement.
The Deed of Transfer of Rights Agreement is made with the hope that when the debtor has finished paying off the debt, he can regain ownership of the object he pledged to the lender. However, if the debtor has finished paying off the debt and the lender still does not want to return the collateral under the pretext that an Authentic Deed in the form of a Deed of Transfer of Rights Agreement has been made, then the lender still cannot own the collateral object because the Authentic Deed made by the parties is not based on the actual causa that occurred between the parties and is based on a prohibited causa.
Every debt agreement that uses the Deed of Transfer of Rights Agreement as collateral creates a defect that violates the provisions of Article 1320 of the Civil Code. The defect in question is a defect of will, namely an agreement that is not based on the pure will of the debtor. An agreement in a defective agreement is an agreement made due to pressure, fraud, or under the influence of another person who abuses the existing situation.
A sale and purchase agreement with the right to repurchase cannot be considered valid because it is based on a false causa and a prohibited causa that violates the law, morality, or public order. A sale and purchase agreement with the right to repurchase as stated in the Deed of Transfer of Rights Agreement is a simulation agreement, which contains a false causa or a pro forma agreement (pretended agreement) because there is a discrepancy between the statement and the will. This is also in line with the Supreme Court Decision Number: 1729 K \/ Pdt \/ 2004 which essentially states that: “A Sale and Purchase Agreement with the right to repurchase is a disguised or sham debt agreement.”
Thus, a sale and purchase agreement with the right to repurchase, which is actually based on a false causa, namely the causa of debt, is considered null and void from the beginning, and the judge is authorized by virtue of his office to pronounce the cancellation, even if it is not requested by a party or absolutely null and void or null and void by law.
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