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The Philosophical Function of Contracts in Realizing
Justice
Niru Anita Sinaga
Universitas Dirgantara Marsekal Suryadarma, Indonesia. nirusinaga@unsurya.ac.id
Article History
Submitted
Revised
Accepted
2023-10-17
2023-10-22 & 2023-11-01
2023-11-02
Abstract
This research aims to determine and discuss the philosophical function of a contract to realize
justice. Therefore, what things must be fulfilled so that the philosophical function of the contract
in realizing justice for the parties can be carried out is also included in the objectives of this
research. This type of research is normative juridical research, using secondary data obtained
from primary, secondary and tertiary legal material sources. The results of this research reveal
that contracts have a fundamental philosophical function, namely realizing the value of justice in
the social and economic order in society by facilitating, accommodating and regulating the
contractual legal relationships of the parties in which there are balanced rights and obligations.
In other words, contracts also function as legal instruments to eliminate or at least reduce
imbalances in the social and economic order in society, especially in contracts made by parties as
citizens or part of society.
Keywords: Contract, justice, philosophical function
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INTRODUCTION
Contracts are developing rapidly as a logical consequence of the development of business
cooperation between business actors (Noor, 2015; Verawati, 2022). Therefore, so that the output
of a business activity in the form of profits (in the broadest sense), which is the aim and objective
of the business activity, can be obtained by business actors, the processes that support the
business activity need to pay attention to the contractual legal aspects that underlie and weave
all their business activities (Syaifuddin, 2016). Regarding the development of legal rules and
contract law practices, which are very important in supporting national and international
business activities in the large current of economic globalization and legal globalization, which
has penetrated the Indonesian economic system and legal system, it is necessary to understand
the importance of a contract.
Talking about contracts cannot be separated from issues of justice (Sinaga, 2018). Talking
about justice is often heard, but the correct understanding is actually complicated and even
abstract, especially when it is linked to various complex interests (Hasibuan, 2009). Contracts
create obligations that give rise to legal consequences for the parties. The legal consequence is the
emergence of reciprocal rights and obligations between the parties. The parties will be bound to
comply with the contents of the contract that has been made. With the existence of a contract, it
is hoped that the parties involved in it can carry out in accordance with the agreed agreements,
doing so in good faith. A contract forms a private entity between the parties where each party has
the legal right to demand implementation and compliance with restrictions that have been agreed
to by the other party voluntarily (Hardjowahono, 2013). Contracts have a vital role in business
activities, generally functioning: Philosophical, juridical and economic.
The function and objectives of contract law cannot be separated from the purposes of law
in general, namely, Justice, expediency and legal certainty. Several legal principles or principles
are the basis for contract law. The main principles or principles considered the cornerstones of
contract law provide an overview of the background of the way of thinking that forms the basis
of contract law. One of the fundamental principles or principles in contract law is the principle of
Justice.
Contracts are essential instruments that structure legal relationships and secure business
transactions (Vonna et al., 2020). So, the contract is understood as an instrument of legal security
(legal cover) for business activities. The contract contains concrete and individual legal norms
(articles) which regulate the rights and obligations of the parties as a reflection of the will (aims
and objectives) of the parties involved. They are making contracts to obtain profits (in the
broadest and humanistic-commercial sense). The central role of contract law in structuring
patterns of business legal relations among business people is increasingly being recognized as
urgent. It is almost certain that there is not a single business activity that brings business people
together to exchange their interests without being based on a contract. So, contracts have an
extensive reach, in the sense that they reach a comprehensive range of public relations, especially
the relations of business people. Contracts are a bridge to business activities that connect the
rights and obligations of each business actor to create legal certainty in achieving business targets.
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Contracts will protect business legal processes and relationships carried out by business
actors (Maulidiana, 2014), if the contract in question is made legally because the validity of a
contract determines the continuation of their business legal processes and relationships.
Contracts as legal instruments to facilitate the exchange of rights and obligations are expected to
take place in a fair, certain and efficient manner in accordance with the agreement of the parties
making the contract. The rules of this exchange are the authority (authority and competence
according to law) of the parties, unless within certain limits, intervention arises, either from
coercive laws (positive-imperative legal norms) or from certain legal institutions (in the case of
this is a judge in the judiciary). However, this intervention is aimed more at maintaining the legal
process of exchanging rights and obligations in a fair, certain and efficient manner (Syaifuddin,
2016). The contract means "a promise must be kept" or "a promise is a debt". With a contract, it is
hoped that each individual will keep their promises and carry them out. With the existence of a
contract, it is expected that the parties involved will be able to carry out the business in accordance
with the agreed agreements, do so in a balanced manner and as a basis for resolving if problems
arise in the future. Balance is defined as something based on efforts to achieve a balanced state,
which, as a result, must give rise to a legitimate transfer of wealth (Boediono, 2006). The principle
of balance is a principle in Indonesian contract law which is a continuation of the principle of
equality, which requires a balance of rights and obligations between the parties to a contract.
However, the implementation of the contract does not always go according to what has
been agreed upon by the parties (a default occurs), so this gives rise to disputes. Business people
often regret when a contract they make has problems, even though these legal problems should
have been anticipated with knowledge, understanding and caution when agreeing to a contract.
Generally, legal awareness is only awakened when the contract is problematic. Understanding
the contents of the contract when the contract is drafted is a must, not after the agreed contract
has problems. Many people think that business contracts are purely business matters and have
nothing to do with legal science. As a result, contract design is often done simply by copying and
pasting. In other words, many business people think that discussing the law when doing business
is considered a step that will only slow down business activities, considering that everything will
tend to be very careful (Syaifuddin, 2016).
If problems arise related to contract implementation, legal means are needed to resolve
them. The existence of law is very necessary to be respected and legal principles to be upheld.
Principles or principles in law function to protect the interests of society. The hope of obeying the
law in practice should work well. The benchmark for this principle can be seen to what extent the
parties receive legal protection if problems arise in implementing the contract. From the
description above, the research objective, which is the main topic of discussion in this research,
is: What things must be fulfilled so that the philosophical function of the contract in realizing
justice for the parties can be carried out?
METHOD
This research uses normative legal research methods (normative juridical research). Using a
statutory approach and a concept approach. The legislative approach is carried out by reviewing
laws/regulations and other implementing regulations related to the philosophical function of
The Philosophical Function of Contracts in Realizing Justice
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contracts in realizing justice in contract implementation in Indonesia. Conceptual approach by
examining legal principles and contract law systems in relation to the philosophical function of
contracts in realizing justice in contract implementation in Indonesia. Using secondary data
obtained from primary, secondary and tertiary legal material sources. Data collection techniques
and tools by researching and collecting library materials (library research). The analysis uses
normative logic, namely based on logic and statutory regulations.
ANALYSIS DAN DISCUSSION
Contracts are made based on freedom of contract and agreement. Based on the principles or
principles of justice, the injured party must receive protection. This aligns with the philosophical
function of contracts, namely to create justice for the parties making the contract, even for third
parties with a legal interest in the contract. Justice is what is aimed at with or through contract
law. This broad understanding of justice can be developed by placing justice as the goal of
contract law. One thing or another will depend on the point of view and way of understanding
justice (Syaifuddin, 2016).
Talking about justice in business activities shows justice is reciprocally related to the
parties involved, not only in the sense that realizing justice will create social stability that will
support business activities but also in the sense that as long as the principles of justice are
implemented, a better and more ethical business will emerge. On the other hand, good, ethical
and fair business practices will contribute to realizing justice in society. On the other hand,
rampant injustice will give rise to social unrest that will disturb business people (Keraf, 2005).
Some understandings or theories that explain justice are:
Plato understood justice as a practice of virtue and harmony (Feiblemen, 1985). Aristotle
provides a formulation of justice, which he differentiates into two types, namely u: 1). Corrective
justice, namely justice by equalizing achievements and counter-achievements, which is based on
transactions both voluntary and involuntary, for example, in exchange agreements; 2).
Distributive justice, namely justice that requires the distribution of rewards (Muchsin, 2004).
Thomas Aquinas, groups justice into two, namely:
1. General justice, namely justice according to the will of the law, which must be carried
out in the public interest;
2. Special justice, namely justice based on the principle of equality or proportionality,
which is divided into three, namely:
a. Distributive justice (justitia distributiva) is justice that is proportionally applied in
the field of public law in general. For example, the state will only appoint someone
to be a judge because they have the skills to be a judge;
b. b. Communitive justice is justice by equalizing achievements and counter-
achievements;
c. c. Vindicative justice is justice in imposing punishment or compensation in
accordance with the amount of discipline that has been determined for the criminal
act committed. (Darmodihardjo & Sidharta, 1995).
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Related to the philosophical function of contracts in realizing justice, there is the "Theory
of the Role of Contract Law in Modern Society" developed by Robert A. Hillman, which
emphasizes that "Contract law serves an important role facilitating private arrangements and
supporting freedom of exchange" (Hillman, 1997), which means that contract law provides a role
in facilitating civil legal relations and supporting the free exchange of interests in society
(Syaifuddin, 2016).
Furthermore, Hillman emphasized in his theory that "Contract law contributes to
distributive justice through its program of mandatory terms and policy standards (Hillman,
1997), which means that contract law plays a role in realizing distributive justice through its
normative clauses which are formed in accordance with established legal standards has been
determined.
Contracts as a means of realizing distributive justice were also emphasized by Kronman,
who stated that: "Contract law enforces principles of distributive of justice, constitute the most
implausible version of the thesis that contract law serves the ends of justice simply because,
unlike, for example, principles of corrective justice, principles of distributive justice specify what
it takes to secure a just distribution of the resources of an entire community among all of its
members. The scope of distributive justice is too great to serves as a basis for contract law”
(Contterrell, 1992).
According to Kronman, contract law upholds the principles of distributive justice. It
serves the simple purpose of justice, as well as specializing in that justice, to ensure a distribution
of resources in society, especially among the various members of that society. The scope of
distributive justice is very broad to serve citizens as a basis for contract law.
Beauchamp and Bowie proposed five principles that must be upheld in order for
distributive justice to be realized, namely if it is provided:
1. to everyone an equal share;
2. to each person according to their individual needs;
3. to everyone according to their rights;
4. to each person according to their individual efforts;
5. to each person according to his services (merit) (Kan & Beekhuis, 1990).
According to Agus Yudha Hernoko, distributive justice is seen as the beginning of all types
of theories of justice, although in various versions and views. Justice in contracts is more
manifested if the exchange of interests of the parties is distributed according to their rights and
obligations proportionally (Hermoko, 2008). Furthermore, Agus Yudha Hernoko explained that
legal thinkers, including John Locke, J.J. Rosseau, Immanuel Kant, and John Rawls, realized that
without contracts and the rights and obligations they create, business society would not function
and people would not be willing to be bound and depend on the statements of other parties.
Contracts provide a way of guaranteeing that each individual will fulfil their promises, further
allowing transactions to occur between them (Hermoko, 2008).
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Adam Smith. His theory has several similarities with Aristotle's theory of justice but has
one important difference besides other differences. Adam Smith only accepted one concept or
theory of justice, commutative justice, arguing that "True justice only has one meaning, namely
commutative justice which concerns equality, balance, harmony in the relationship of one person
or party with another person." Adam Smith argued that there are 3 main principles of
commutative justice, namely:
1. The principle of no harm or not harming other people. In any social interaction, each
person must restrain himself from harming the rights and interests of others, just as he
himself does not want his rights and interests to be harmed by anyone.
2. The principle of non-intervention. This principle demands that for the sake of
guaranteeing and respecting the rights and interests of everyone, no one is allowed to
interfere in the lives and activities of others.
3. Principle of exchange fairness. According to Smith, "justice aims to protect people from
harm suffered due to the actions of others". The principle of communicative justice
primarily concerns restraining or restraining oneself in such a way as to avoid carrying
out actions that harm other people, whether as humans, members of a family or citizens.
(Haakonssen, 1981; Keraf, 2005).
John Locke, J.J. Rosseau and Immanuel Kant, although their theories of justice were contract-
based, were criticized by John Rawls because they tended towards utilitarianism and intuitionism
(Rawls, 1971). Rawls's theory of justice starts from his criticism of the failure of previously
developed ideas of justice, which were caused by their substance being heavily influenced by
utilitarianism and intentionalism (Ujan, 1999). Rawls places freedom as the first principle of
justice in the form of the "principle of equal freedom". This principle states: "Every person must
have equal rights to the most extensive system of basic freedoms compatible with a system of
similar freedoms for all" (Rawls, 1971). Nevertheless, Rawls criticized the market economic
system because, from another perspective, the market actually creates and even widens the gap
in economic inequality between the rich and the poor. On this basis, Rawls then proposed his
second principle of justice, in the form of the Difference Principle, namely that social and
economic inequalities must be arranged in such a way that these inequalities benefit those who
are most disadvantaged, and in accordance with the duties and positions open to all, under
conditions of equal opportunity. Thus, according to Rawls, the way out of economic inequality is
to rely on a combination of market mechanisms and selective government policies aimed at
helping groups who are objectively unable to take full advantage of market opportunities.
Rawls offers a form of resolving justice problems by building a contract-based theory of
justice, which makes the principles of justice chosen together indeed the result of mutual
agreement of all free, rational and equal people who can guarantee the implementation of rights
while distributing obligations equally. Fair for everyone. A good concept of justice must be
contractual so that any idea of justice not based on a contract must be put aside in the interests of
justice itself (Ujan, 1999). Rawls defines justice as "fairness" (justice as fairness) (Rawls, 1971)
which, according to K. Bartens' explanation, in the linguistic meaning (dictionary), means fair and
fair. However, there is a difference, namely that it means fair according to its content (substance),
which is called substantive justice, while fair means fair according to the procedures, which is
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called procedural justice. As for fairness, it means justice that is based on reasonable procedures
(not engineered, not manipulated) (Bartens, 2000) Then, Rawls explains that there are two
principles of justice, namely: "First, each person is to have an equal right to the most extensive
basic liberty compatible with similar liberties for others; second, social and economic inequalities
are to be arranged so that they are both (a) reasonably expected to be to everyone's advantage,
and (b) attached to positions and offices open to all." (Rawls, 1971).
Paying attention to the essence of the contract-based theory of justice developed by Rawls
as described above, it can be understood that justice as fairness contains two principles of justice,
namely:
1. The principle of greatest equality, meaning that justice will be realized if everyone has the
same rights to the broadest fundamental freedoms, as comprehensive as the same
freedoms for everyone;
2. The principle of difference (the different principles) and the principle of equal and fair
opportunity (the principles of fair equality opportunity), meaning that justice will be
realized if social and economic inequality must be regulated in such a way so that it is
hoped that it will provide the most significant benefits for the people who disadvantaged,
which emphasizes that with equal conditions and opportunities, all positions and
positions must be open to everyone (Bartens, 2000; Keraf, 2005; Ujan, 1999).
According to Agus Yudha Hernoko, the greatest equal principle referred to by Rawls is
none other than the "principle of equal rights", which provides equality of rights and is inversely
proportional to the burden of obligations that each person (i.c. the contractee) has. This principle
is the spirit of the principle of freedom to make contracts. Furthermore, the different principles
and the principles of (fair) equality of opportunity referred to by Rawls are "principles of objective
differences, which guarantee the realization of proportionality in the exchange of rights and
obligations of the parties, so that it is reasonable (objective) to accept exchange differences, as
long as they fulfil requirements of good faith and fairness (redelijkheid en billijkheid). So, the first
principle and the second principle cannot be separated from each other because justice will be
realized only if these two principles are implemented comprehensively (Hermoko, 2008).
Rawls's theory of justice is, in many ways, effective in dealing with social problems.
However, on the other hand, this theory has also been criticized, especially the difference
principle, which, according to its critics, actually creates injustice because there is an opportunity
for state intervention to violate a person's rights.
Robert Nozick, a libertarian philosopher, has liberalistic thoughts about distributive
justice that are different from Rawls' views, which he calls "entitlement theory", which
understands that all types of distribution of benefits and burdens are fair if they allow individuals
to exchange goods fairly. Freedom. Nozick developed his theory of justice using a radical free-
market approach and placing the state's role as a night watchman, meaning that state interference
with individual freedom must be limited to a minimum (the principle of minimal state
interference) (Morrison, 1998).
According to Nozick, a person is considered to own something fairly if that ownership
comes from a free decision that has a "right" basis that relies on three principles, namely:
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1. The principle of "original acquisition", which means acquiring something for the first time,
for example by producing it yourself;
2. The principle of "transfer", meaning ownership of something based on a transfer or being
given through another person;
3. The principle of "rectification injustice", which means the recovery of something that was
previously taken from a person so that any intervention from outside is a violation of
freedom (Bartens, 2000).
Nozick's principle clearly relies on the principle of justice in ownership based on rights,
in the sense that ownership of something (goods and services) must be based on recognising the
rights of individuals free to carry out a fair exchange process (goods and services). It turns out
that Nozick's liberalistic thinking regarding distributive justice, as described above, has also
received criticism from philosophers.
Nieuwenhuis explains the balance of exchange justice (ruilrechtvaardigheid), namely the
balance of bargaining positions rather than equality of achievements, which forms the core of
material exchange justice (Nieuwenhuis, 1979). xisting legal rules are not (ever) adequate to
regulate or resolve all problems that arise in certain societal situations. However, the law must
still provide a fair resolution to all these problems. Nieuwenhuis explains that "De rechtvaardigheid
als een formele categorie die gelijke behandeling voorschrijft miet worden ingevuld met een behulp van een
materieel criterium dat op zijn beurt de neerslag vormt van het vigerende waardenpatroon", which means
towards justice as a formal category that advocates equal legal treatment to similar cases or
disputes, material criteria must be added which in turn can become the basis for a balanced
assessment pattern (Nieuwenhuis, 1979).
Herlien Budiono explains his thoughts on the meaning of Indonesian justice and its scope
in national contract law. The meaning of justice, which can be divided into procedural meaning
and substantive meaning, is embedded and rooted in the conditions of society. The procedural
meaning of justice is related to the legal system or legal state. On the other hand, the substantive
meaning of justice is related to social conditions, which provide an overview of legal politics and
society's legal awareness. The relationship between the two meanings of justice depends on the
choice of the legitimacy of the principles that underlie life together or by establishing a pattern of
values as the basis for material criteria for the meaning of justice. For Indonesian people, the
principle of living together is based on Pancasila (Boediono, 2006).
Paying attention to explanations that rely on legal theories as described above, contracts
have a fundamental philosophical function, namely realizing the value of justice in the social and
economic order in society by facilitating, accommodating and regulating the contractual legal
relationships of the parties in which there are rights and balanced obligations. In other words,
contracts also function as legal instruments to eliminate or at least reduce imbalances in the social
and economic order in society, especially in contracts made by parties as citizens or part of society
(Syaifuddin, 2016). To realize the philosophical function of a contract, several things must be
understood and adhered to when making a contract, namely: Basic terms and understanding of
contracts and contract law, Function of contracts, Subject and object of contract law, Principles of
contract law, Conditions for the validity of a contract, Forms and types of contracts, drafting,
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anatomy of deeds and legal language of contracts, interpretation of contracts, general terms and
provisions in contract law, resolution of disputes in the field of contracts and the end or
cancellation of contracts and agreements.
CONCLUSION
Contracts have a fundamental philosophical function, namely realizing the value of justice in the
social and economic order in society by facilitating, accommodating and regulating the
contractual legal relationships of the parties in which there are balanced rights and obligations.
In other words, contracts also function as legal instruments to eliminate or at least reduce
imbalances in the social and economic order in society, especially in contracts made by parties as
citizens or part of society. To realize the philosophical function of a contract, several things must
be understood and adhered to when making a contract, namely: Basic terms and understanding
of contracts and contract law, Function of contracts, Subject and object of contract law, Principles
of contract law, Conditions for the validity of a contract, Forms and types of contracts, drafting,
anatomy of deeds and legal language of contracts, interpretation of contracts, general terms and
provisions in contract law, resolution of disputes in the field of contracts and the end or
cancellation of contracts and agreements.
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