Freedom of Contract Versus Public Regulatory Control in Government Construction Contracts: A Legal Analysis Under Law No. 2 Of 2017 on Construction Services

Authors

  • Melkianus Ndaomanu Universitas Kristen Artha Wacana, Kupang, Indonesia.
  • Frengky Ndaomanu Universitas Kristen Artha Wacana, Kupang, Indonesia.
  • Dian Nustanti Ndaomanu Universitas Kristen Artha Wacana, Kupang, Indonesia.

DOI:

https://doi.org/10.38035/gijlss.v4i1.777

Keywords:

Construction Contracts, Construction Services Law, Freedom of Contract

Abstract

The principle of freedom of contract is a fundamental doctrine in private law that grants parties autonomy to determine agreements. In Indonesian civil law, this principle is reflected in Article 1338 of the Civil Code, which affirms that legally concluded agreements bind the parties. However, its application is more complex in government construction contracts because they involve public resources and public policy. This study analyzes the application and limitations of contractual freedom in government construction agreements under Law No. 2 of 2017 on Construction Services. This research uses a normative juridical approach to examine statutory regulations, legal doctrines, and scholarly perspectives. The findings show that contractual autonomy operates as regulated autonomy rather than absolute freedom. Procurement regulations, administrative authority, technical standards, and public accountability mechanisms significantly influence the structure and implementation of construction agreements. These regulatory constraints produce several legal consequences, including limited negotiability of contractual clauses, potential invalidity of provisions exceeding administrative authority, and stronger requirements for regulatory compliance in determining contractual validity. The study further indicates that these limitations require a more structured approach to drafting government construction contracts, emphasizing standardized clauses, transparent procurement procedures, and clear risk allocation. Strengthening the balance between contractual flexibility and regulatory oversight is therefore essential to improve legal certainty, accountability, and efficiency in public infrastructure development.

References

Arrowsmith, S. (2010). Public procurement: Basic concepts and the coverage of procurement rules. Public Procurement Law Review, 19(3), 123–145.

Arrowsmith, S. (2014). The Law of Public and Utilities Procurement. Sweet and Maxwell.

Atiyah, P. S. (1995). An Introduction to the Law of Contract. Oxford University Press.

Collins, H. (2003). The Law of Contract. Butterworths.

Doloi, H. (2013). Cost overruns and failure in project management: Understanding the roles of key stakeholders in construction projects. Journal of Construction Engineering and Management, 139(3), 267–279. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000621

Eriksson, P. E., & Westerberg, M. (2011). Effects of cooperative procurement procedures on construction project performance. International Journal of Project Management, 29(2), 197–208. https://doi.org/10.1016/j.ijproman.2010.01.003

Erridge, A., & McIlroy, J. (2002). Public procurement and supply management strategies. Public Policy and Administration, 17(1), 52–71. https://doi.org/10.1177/095207670201700104

Fried, C. (2015). Contract as Promise: A Theory of Contractual Obligation (2nd ed.). Oxford University Press.

Hughes, W., Champion, R., & Murdoch, J. (2015). Construction Contracts: Law and Management. Routledge.

Ling, F. Y. Y., Chan, S. L., Chong, E., & Ee, L. P. (2004). Predicting performance of design-build and design-bid-build projects. Journal of Construction Engineering and Management, 130(1), 75–83. https://doi.org/10.1061/(ASCE)0733-9364(2004)130:1(75)

Love, P. E. D., Edwards, D. J., & Smith, J. (2016). Rework causation: Emergent theoretical insights and implications for construction procurement. Engineering, Construction and Architectural Management, 23(4), 467–482. https://doi.org/10.1108/ECAM-02-2015-0020

Marzuki, P. M. (2019). Penelitian Hukum. Kencana.

Nguyen, L. D., Ogunlana, S. O., & Lan, D. T. X. (2004). A study on project success factors in large construction projects in Vietnam. Engineering, Construction and Architectural Management, 11(6), 404–413. https://doi.org/10.1108/09699980410570166

Nicholas, B. (2016). The French Law of Contract. Oxford University Press.

Poole, J. (2012). Textbook on Contract Law (11th ed.). Oxford University Press.

Rahardjo, S. (2006). Ilmu Hukum. Citra Aditya Bakti.

Salim, H. S. (2017). Hukum Kontrak: Teori dan Teknik Penyusunan Kontrak. Sinar Grafika.

Subekti. (2005). Hukum Perjanjian. Intermasa.

Sutedi, A. (2012). Aspek Hukum Pengadaan Barang dan Jasa. Sinar Grafika.

Thai, K. V. (2001). Public procurement re-examined. Journal of Public Procurement, 1(1), 9–50.

Thai, K. V. (2009). International Handbook of Public Procurement. CRC Press.

Triwibowo, D. (2018). Legal Regulation of Construction Services in Indonesia. Journal of Indonesian Legal Studies, 3(2), 145–160.

Widjaja, G. (2013). Perikatan yang Lahir dari Perjanjian. Raja Grafindo Persada.

Xia, B., Chan, A. P. C., & Yeung, J. F. Y. (2011). Developing a conceptual framework for construction procurement selection. Automation in Construction, 20(3), 305–312. https://doi.org/10.1016/j.autcon.2010.10.021

Yahman. (2016). Karakteristik Hukum Kontrak Bisnis. Prenadamedia Group.

Yasin, M. (2018). Government Procurement Law and Construction Services Regulation in Indonesia. Indonesian Law Review, 8(1), 45–62.

Ye, X., Zeng, N., & König, M. (2022). Systematic literature review on smart contracts in the construction industry. Frontiers of Engineering Management, 9(3), 405–420. https://doi.org/10.1007/s42524-022-0188-2

Zakaria, R. (2019). Legal Principles of Construction Contracts in Indonesia. Journal of Law and Legal Reform, 1(2), 201–214.

Downloads

Published

2026-04-29

How to Cite

Ndaomanu, M., Ndaomanu, F., & Ndaomanu, D. N. (2026). Freedom of Contract Versus Public Regulatory Control in Government Construction Contracts: A Legal Analysis Under Law No. 2 Of 2017 on Construction Services. Greenation International Journal of Law and Social Sciences, 4(1), 168–181. https://doi.org/10.38035/gijlss.v4i1.777

Issue

Vol. 4 No. 1 (2026): Vol. 4 No. 1 (2025): (GIJLSS) Greenation International Journal of Law and Social Sciences (March - May 2026)

Section

Articles

License

Copyright (c) 2026 Melkianus Ndaomanu, Frengky Ndaomanu, Dian Nustanti Ndaomanu

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Copyright :

Authors who publish their manuscripts in this journal agree to the following conditions:

  1. Copyright in each article belongs to the author.
  2. The author acknowledges that the Greenation International Journal of Law and Social Sciences (GIJLSS) has the right to be the first to publish under a Creative Commons Attribution 4.0 International license (Attribution 4.0 International CC BY 4.0).
  3. Authors can submit articles separately, arrange the non-exclusive distribution of manuscripts that have been published in this journal to other versions (for example, sent to the author's institutional repository, publication in a book, etc.), by acknowledging that the manuscript has been published for the first time at GIJLSS.