As a fundamental principle, an contract must be carried out in good faith pursuant to Article 1338 paragraph (3) of the Indonesian Civil Code (hereinafter, the “BW”) in fulfilling the requirements for validity of an contract as stipulated in Article 1320 BW. The good faith principle is a cornerstone for every stage of contract, which is threefold: contract drafting stage, implementation stage, and stage after contract implementation. This article utilized juridical normative research with conceptual and statute approaches which stipulates that the concept of good faith has also extended its legal protection to parties of a land sale and purchase contract through auction or an auction winner. Such protection owed by those who are able to satisfy the requirements set forth under the Supreme Court Circular Letter and other criteria taken into account the applicable laws, regulations and legal principles.
Ironically, the exact meaning of this principle has never been a definitive one under any laws and regulation. Thus, the risk of potential occurrence of bad faith in a contract arose by the absence of such certainty, including in a land sale and purchase contract. The Supreme Court has on numerous occasions construed the meaning of a good faith buyer under its Decision Number 112 K/Sip/1955, Decision Number 3447 K/Sip/1956 and Decision Number 242 K/Sip/1958. Such concept ties to those who did not presume that the seller was not the only person entitled to the object and is the one who was unaware of the existence of legal defects in the sale and purchase activity conducted. In the context of the sale and purchase contract with land as its object, the good faith principle enshrined during the issuance of land certificate in order to remain entitled as the legal right holder to obtain protections.
The good faith may exist when the buyer purchased the land through the auction of the State Receivables Affairs Committee and through auction or an auction winner. However, the Supreme Court constructed the new criteria of auction winner as a good faith buyer by buying a price below the price limit while having the role as a creditor. However, the current laws and regulations have never provided definite criteria for a good faith buyer in the land sale and purchase through auction. Referring to the Supreme Court Decision Number 252 K/Pdt/2002, Number 1816 K/Pdt.1989 and Decision Number 4340 K/Pdt/1986, the purchase considered pursuant with good faith principle when these requirements can be met: the auction winner is the creditor himself who purchases at a price far below the collateral for his credit, when the land are being purchased in accordance with statutory regulatory procedures and documents and also after the proper due diligence has been conducted. To conclude, this article suggests the Supreme Court provide more definite guide- lines regarding good faith buyers specific to land sale and purchase activity through auction as outlined in the form of Surat Edaran Mahkamah Agung.
Penulis: Faizal Kurniawan, Xavier Nugraha, Ardhana Christian Noventri, Qona’aha Noor Maajid.
