Types of Agreements Often Used in Business Practices

In the business world, you must be able to distinguish between different types of agreements for business transactions. Why is that? This is because different legal principles apply to each type of transaction.

The rights and obligations of the parties will be determined by the nature of their contract and the legal rules governing the particular type of agreement.

In addition, agreements in business are more practical than the general rules outlined in the law. The types of agreements in business have their own unique character and concept.

The types of contracts that are often used in business practice include the following:

Contracts Related to the Goods Supply Process

These types of agreements in Indonesia relate to the process of supplying goods in business, both in terms of selling and buying goods.

1. Sale and Purchase Agreement of Goods

Contracts for buying and selling goods are the most common form of business transactions. Every time you buy goods, whether from a supermarket, market stall, doorstep seller, by mail order or using the Internet, you have signed a contract for the sale of goods.

This sale and purchase contract is regulated in the Civil Code, which is specifically contained in article 1457. In that article the sale and purchase is interpreted as an agreement in which one party binds himself to surrender the object and the other party binds himself to submit an amount of money according to the agreed price. .

Understanding this definition in detail will help you distinguish buying and selling from other contracts which are also the process of moving goods. Sale and purchase is one of the types of agreements in the Civil Code.

The goods referred to in this case can be tangible goods such as food, clothing and furniture. You can learn more about the term object or goods in material law.

The benchmark used in buying and selling must be money, although practically there are sometimes buying and selling using goods as a means of payment.

2. Buying and Selling Credit

There is another form of sale-purchase contract, namely a credit sale and purchase where you can get the goods without having to pay cash when you get the rights to the goods.

In credit buying and selling, the buyer gets the goods by replacing them with a certain amount of money in installments. There are other terms that you must understand in buying and selling credit, which are as follows:

Rent buy

This is one of the most popular ways to buy goods on credit. HP is essentially an agreement to lease an item, which the tenant can ultimately exercise the option to purchase from the owner.

The lessee gets direct use and enjoyment of the item, but he does not become the owner unless and until all installments are paid off.

There is a difference between buying and selling and buying and selling. The sale of goods includes an agreement to transfer ownership of the goods at some time in the future. However, the lease purchase agreement does not bind the lessee to purchase. He may choose to pay the rent for the item and then refuse to buy it.

Conditional sale and purchase.

A conditional sale is very similar to a lease purchase. Customers get goods immediately by paying installments in stages. The transfer of ownership is postponed until certain conditions are met.

The difference between the two agreements is that the buyer under a conditional sale agreement commits to purchase from the outset. So, a conditional sale is actually a type of contract for the sale and purchase of goods.

Credit sales

This is another way to buy goods by paying in installments. Unlike leases and conditional sales agreements, ownership of the goods passes to the buyer from the beginning of the agreement.

3. Guarantee Contract

The types of agreements that often exist in the next business practice are guarantee contracts.

A guarantee contract arises when the owner of the goods (the bailor) entrusts his ownership to the care of another person (the bailee). Examples of collateral include placing important documents in the bank, picking up clothes to dry-clean, and renting a TV.

Some of the obligations of the party managing the guarantee include:

    to take reasonable care of the goods while in their possession; and

    to return it to the bailor, at the end of the agreed period or upon request.

Employment contract

The next type of agreement is an employment contract. There are two ways to obtain someone’s services. He may be employed either as an employee under a service contract or as an independent contractor under a contract for services.

1. Service contract

This type of contract creates an employer and employee relationship between the parties. An employee works for his employer in exchange for wages. The employer exercises control over the way an employee does his or her job. Simply put, it is an employment contract between an employee and an employer.

2. Contract for service

An entrepreneur is bound under a contract for services. The self-employed person is an independent contractor, agrees to perform the work or provide services as he wishes, and enjoys considerable independence from the person who employs him.

Agency Contract

The next types of agreements are agency contracts. An agent is a person employed by a principal to enter into contracts on his behalf with a third party.

An employee who contracts on behalf of his employer acts as an agent. A shop assistant, for example, falls into this category. Alternatively, an agent may be a contractor depending on his skills and knowledge.

Someone who wants to sell their shares will usually use the services of a stockbroker to arrange the sale. Travel agents, real estate agents, auctioneers, insurance brokers are examples of agents. Agents may fall into one or more of the following categories:

The general agent party has the power to act on its principle in relation to certain types of transactions, e.g. real estate agent.

Special agents are limited to acting in relation to one particular transaction.

An intermediary or agent who has the habit of conducting his business as an authorized agent to sell goods or deliver goods for the purpose of selling goods, or to purchase goods, or to collect money for the security of goods.

A credit agent is an agent who, in return for an additional commission, guarantees that if the introduced third party fails to pay for the goods received, the agent will indemnify the principal.

Contracts for Financial Services

The Bank provides various financial services to commercial customers ranging from demand deposits, loan and overdraft facilities, to specialist services for those involved in foreign trade.

The relationship between the bank and its customers is contractual. The rights and obligations of the parties to this contract have been developed over the years from merchant practice. This is one of the types of agreements outside the Civil Code regulated in Banking Law.

Insurance Contract

A wise entrepreneur will always assess the risks that may befall his business: he may fall ill, his property may be destroyed by fire, or his shares may be stolen. This risk can be minimized by insurance.

An insurance contract is an agreement in which an insurance company takes over to compensate a person, called the insured, if the insured risk actually occurs.

Translation results

The Insured will be asked to fill out a proposal form. The contract is formed when the insurance company accepts the proposal. An insurance contract is a contract in good faith (uberrimae fi dei).

This means that the insured must voluntarily disclose all relevant information that may influence the insurer’s decision to insure or the premium to be charged. Failure to do so, however innocent, will allow the insurer to avoid the contract.

Not all types of agreements are mentioned in this review, because it will be very time consuming and endless discussion. At least, some of the contracts that have been mentioned are contracts that must be carried out in a business regardless of the type of business being carried out.