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Abstract
A promissory note is a negotiable instrument governed by the Commercial Code in Indonesia and the Bills of Exchange Act 1949 in Singapore. This research conducts a comparative legal study concerning the legal protection afforded to creditors of promissory notes in cases of debtor default. This research aims to analyze the legal protection afforded to promissory note holders in cases of debtor default under Indonesia and Singaporean law. The objective of this study is to examine the legal basis for the use of promissory notes and the extent of protection granted to creditors when the debtor fails to pay at maturity. Using normative legal research methods, the study applies a statute approach, a comparative approach, and a conceptual approach. The results show that the legal framework in Indonesia still contains several weaknesses. A significant limitation of Indonesian law is the unavailability of collateral arrangements, which stands in contrast to the Singaporean legal system that accomodates the use of tangible assets as collateral security, thereby affording creditors enhanced legal protection. Moreover, the regulatory framework in Indonesia remains ambiguous with regard to installment payments; while one provision renders promissory notes invalid if paid by installment, another permits partial payment by the debtor. Based on the findings, this study recommends comprehensive reform of Indonesia’s legal framework governing promissory notes. It also encourages parties to exercise caution when using promissory notes as credit instruments. The research highlights the importance of clear legal standards to ensure effective creditor protection and legal certainty in financial transactions involving promissory notes.
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Copyright (c) 2025 Muhammad Fauzan Syauqi Rabbani, Siti Hapsah Isfardiyana
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References
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References
Abdulkadir, Muhammad. Commercial Law on Negotiable Instruments. Second Edition. Bandung: Alumni, 1984.
Atmadjaja, Djoko Imbawani. Indonesian Commercial Law: History, Definition, and Principles of Commercial Law. Malang: Setara Press, 2012.
Emirzon, Joni. Negotiable Instruments Law and Its Development in Indonesia. Jakarta: Prenhallindo, 2002.
Munir Fuady, Legal Research Method: Theoritical and Conceptual Approach, 1st ed. (Depok: Rajawali Pers, 2018)
Satrio, J. Breach of Contract According to the Indonesian Civil Code, Doctrine, and Jurisprudence. Bandung: PT Citra Aditya Bakti, 2012.
Simanjuntak, Emmy Pangaribuan. Negotiable Instruments Law, as cited in Sri Harini Dwiyatmi, First, Second, and Third Generation Negotiable Instruments Law. First Edition. Yogyakarta: Pustaka Pelajar, 2022.
Suratman and Philips Dillah. Legal Research Methods. Third Edition. Bandung: Alfabeta, 2015.
Achmad, Andyna Susiawati, and Astrid Athina Indradewi. “The Legal Position and Consequences of a Supplementary Agreement Not Renewed with Its Principal Agreement.” Journal of Law, Humanities, and Politics (JIHHP), Vol. 4, No. 6 (2024).
Yessica, Evalina. “Characteristics and the Relationship Between Unlawful Acts and Breach of Contract.” Repertorium Journal, Vol. 1, No. 2 (2014).
Quah, Jon S.T. “Why Singapore Works: Five Secrets of Singapore’s Success.” Public Administration and Policy: An Asia-Pacific Journal, Vol. 21, No. 1 (2018).
Wahyuningdyah, Kingkin. “Reconstructing Negotiable Instruments Law in the Development of the National Legal System.” Fiat Justisia: Journal of Legal Studies, Vol. 5, No. 3 (2015): 339.
Bahtiar, Lukman Farid, and Agus Yudha Hernoko. “Legal Protection for Creditors in Binding Collateral Objects in the Form of Power of Attorney to Sell When the Debtor Defaults.” Journal of Legal Communication, Vol. 4, No. 2 (2018).
Rajanayagam, M. J. L. “Banking and Bills of Exchange in Malaysia and Singapore.” Malaya Law Review, Vol. 10, No. 1 (1968): 79.
Bills of Exchange Act 1949.
Commercial Code of Indonesia (Kitab Undang-Undang Hukum Dagang).
Civil Code of Indonesia (Kitab Undang-Undang Hukum Perdata).
Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector.
Economist Intelligence Unit. "Singapore – Country Profile." https://globaledge.msu.edu/countries/singapore/. Accessed June 27, 2024, at 22:19 WIB.
GlobalEDGE. “Singapore Retains Its Lead in Business Environment Rankings.” https://www.eiu.com/n/singapore-retains-its-lead-in-business-environment-rankings/. Accessed June 27, 2024, at 22:18 WIB.
Singapore Statutes Online. Bills of Exchange Act 1949. https://sso.agc.gov.sg//Act/BEA1949. Accessed August 28, 2024, at 17:08 WIB.
Hukumonline.com. “Definition of Breach of Contract, Its Consequences, and Resolution.” https://www.hukumonline.com/berita/a/unsur-dan-cara-menyelesaikan-wanprestasi-lt62174878376c7/?page=2. Accessed September 25, 2024, at 11:12 WIB.
LegalZoom. “Secured Promissory Notes vs. Unsecured Promissory Notes.” https://www.legalzoom.com/articles/secured-promissory-note-vs-unsecured-promissory-note. Last accessed December 24, 2024, at 04:47 WIB.
SG Court. “File Writ of Seizure and Sale.” https://www.judiciary.gov.sg/civil/file-writ-of-seizure-and-sale. Last accessed December 24, 2024, at 05:16 WIB.
Singapore Statutes Online. Bills of Exchange Act 1949. https://sso.agc.gov.sg/Act/BEA1949?ValidDate=20211231&Timeline=On. Last accessed September 15, 2024, at 13:19 WIB.