RECONCEPTUALISATION OF NOVATION IN CONTRACT LAW: A REVIEW OF THE PRACTICE OF CONVERTING LOCAL GOVERNMENT PROJECT  AGREEMENTS INTO SHARES

Anita Kamilah; Hesti Dwi Astuti; Wandi Setiawan; Delis Nia Nadiyana; Amani Sabila

Authors

Anita Kamilah Suryakancana University
Hesti Dwi Astuti Suryakancana University
Wandi Setiawan Suryakancana University
Delis Nia Nadiyana Suryakancana University
Amani Sabila Suryakancana University

Keywords:

Local Government Projects; Novation Reconceptualisation; Share Conversion.

Abstract

Novation, as a form of contract termination, plays an important role in addressing obstacles to local
government project development due to default or force majeure. Novation has legal consequences not only for
the legal relationship between the parties but also for the subject matter of the contract that had previously been
established. This study plays an important role in examining: (1) the reconceptualisation of novation through
share conversion from a contract law perspective; and (2) the form of novation in the conversion of local
government project agreements into shares. The approach used in this research is juridical, descriptive
analytical research specification, and the types and sources of data consist of secondary data supported by
primary legal materials, secondary legal materials, and tertiary legal materials. Data analysis is conducted
qualitatively. The results of the study show that the concept of novation is no longer only interpreted as the
replacement of debt with debt, but there is a transformation of the form of agreement into a different type of
legal relationship through capital/share ownership in a company. The conversion of local government project
agreements into shares falls under objective novation, as well as passive subjective novation and passive
subjective novation.