Legal Force of Underhand Credit Agreements in Banking Practices

Abstract

This research examines the legal force of private credit agreements used in banking practice, with particular attention to the relationship between creditor and debtor, the binding force of agreements, and evidentiary consequences when default occurs. The research uses an empirical juridical approach with descriptive analytical specifications. Primary data are obtained through interviews and examination of credit agreement documents and banking practices, while secondary data are derived from legislation, legal books, and relevant scientific journals. The analysis focuses on the requirements for a valid agreement under Article 1320 of the Indonesian Civil Code, the binding force under Article 1338, the cancellation mechanism under Article 1266, and the evidentiary force of private deeds under Articles 1874 and 1875. The study emphasizes that a private credit agreement is not legally weak simply because it is not an authentic deed. Once validly made, it binds the parties; however, its evidentiary position differs from an authentic deed, particularly when the signature or contents are disputed. The study also underlines the need to maintain a balanced legal position between creditor and debtor and to ensure that banking credit practices remain consistent with good faith, prudence, legal certainty, and protection of both parties.