If the debt is not paid according to the agreement, a breach of contract has occurred. However, regarding the amount of the late penalty of 10% per month of the remaining principal debt, even though it was agreed upon, according to the supreme court the amount of the penalty was deemed inappropriate because it was contrary to decency and the sense of justice of the society. The appropriate penalty is 3% per month. according to the supreme court.

Supreme Court Decision No. 494 K/Pdt/1995, 12 December 1995

Regards,

Fredrik J. Pinakunary