Application of the Principle of Good Faith in the Performance of Commercial Contracts Based on Article 1338 of the Indonesian Civil Code

Abstract

The principle of good faith is a fundamental principle in contract law, serving to maintain a balance of interests, trust, and legal certainty for the parties in a commercial contract. This study aims to analyze the application of the principle of good faith in the implementation of commercial contracts, the factors influencing its application, and the legal impacts that arise if this principle is violated. The research method used is normative legal research with a statutory approach. This descriptive study utilizes secondary data consisting of primary, secondary, and tertiary legal materials. The legal materials were collected through literature review. The research results show that the principle of good faith serves as a guideline for the parties' behavior as well as a preventive instrument in preventing contractual disputes. Its implementation is influenced by the level of legal understanding and awareness, the provisions of the Civil Code, law enforcement practices, the quality and clarity of contracts, as well as organizational culture and business ethics. Violations of the principle of good faith can lead to disputes, cancellation or invalidity of agreements, claims for compensation, material and immaterial losses, loss of trust, and disruption to the continuity of business relationships. Therefore, consistent application of the principle of good faith is necessary to ensure legal certainty, protection of the parties, and the continuity of commercial contracts.