The Legal Framework and Commitment in Bank Credit Agreements: Empirical Insights from Indonesia

The theory of legal protection aims to safeguard vulnerable communities both economically and juridically. In the pursuit of protecting human rights, the state seeks to maintain a harmonious relationship between government institutions and citizens, grounded in a balanced and functional distribution of state powers, where disputes are resolved through deliberation. This study focuses on the commitments and agreements established between banks and their credit clients. A descriptive qualitative approach was employed to explore this dynamic. The findings reveal key distinctions in the classification of collateral objects, categorized as either movable or immovable, highlighting five primary differentiations. First, these distinctions pertain to the form of collateral, distinguishing between fiduciary, pledge, and mortgage rights based on the nature of the collateral whether movable or immovable. Second, leveraging of collateral is contingent on the object type, influencing the method of delivery. Third, movable objects are delivered through physical transfer, while immovable objects require formal procedures, such as title transfer. Fourth, the expiration terms for collateral differ, with immovable objects typically having no expiration, while movable objects have an expiration clause. Finally, the concept of possession (bezit) is crucial, where the possessor of movable property is regarded as the owner, in contrast to immovable objects, where possession does not confer ownership.