Abstract
One of the exceptions to the pacta sunt servanda, which is a general principle of the contract law, is when the obligation becomes excessively onerous which constitutes an extreme imbalance between the acts. The prevention of the violation of equity which may occur in the event of drastic and unpredictable change of the economic circumstances can be possible by contract intervention. The general scope of hardship, its effects to the contracts and the conditions of the adaptation of contracts are the main issues that are discussed in this article. After the main points of the adaptation of contracts are explained, the characteristic matters of contract of work are evaluated and disputable matters are mentioned along with the examples from the practice. The importance of a detailed analysis for each concrete case in terms of adaptation lawsuits and the necessity of avoiding abuse of that right are described. However, the necessity of avoiding the general acceptances which may prevent to exercise this right is also explained with case studies.
I. INTRODUCTION
Although the principle of adaptation of contracts has been recently regulated, it can be said that the legislation has been constituted in compliance with the existing practice and general acceptance. The parties’ wills and aims to sustain the agreement is the priority. Nevertheless, subsequent state of urgency which significantly makes the execution of an act for one of the parties difficult, requires the equalization of fairness or at least the approximation of its effects to the parties. The regulation of “adaptation of contracts” as the supporting foundation of that aim has been made and was accepted in the Supreme Court decisions and in the doctrine all along.
As the importance of the contracts increases day by day both for the parties and for the legal order, the requirement of adaptation and the continuance of the contracts in all conditions as well as adapting the contract to the changing conditions also gain importance. The matters such as what might be the changing circumstances, in which circumstances they might cause hardship in fulfillment, who may request the adaptation of contracts are emphasized below.
In this article, after the general overview of the topic, the adaptation of contacts is embraced within the framework of special provisions, which are regulated in the Law of Obligations1 regarding the contract of work. The necessity for the real beneficiaries’ not to be destitute and to prevent any abuses is covered with case studies for adaptation, which is created in order to prevent the participating parties where contracts may force them to make unanticipated sacrifices in contingencies.
In the last section of this article, the legal scope of adaptation lawsuits and its affects on the wills of the parties will be covered.
II. ADAPTATION OF CONTRACTS
A. General Overview
The essential aim in the contract law is the whole and exact fulfillment of the parties’ actions. The dominating principle in here is pacta sunt servanda (adherence to the agreements). According to this principle, in spite of all difficulties and obstacles, the act in the contract should be specifically performed by the debtor. A strict application of this principle which has arisen from the need of legal security and good faith and which requires specific performance of the debt may contradict with fairness, good faith and justice in some exceptional cases. In this section, the mentioned exceptional cases will be explained with examples and which legal actions shall be resorted to in which circumstances and conditions in order to eliminate unfairness and imbalance between acts will be described. After the general assessment is made under this headline, the legal scope which is especially applied to the contracts of work which is the main subject of this article will be presented.
B. Conditions for Adaptation of Contracts
The terms and conditions available in the establishment of a contract and the new ones that come up during its execution can sometimes differ extremely. Despite these differences, requesting exact performance of the debt may constitute contradiction to the good faith rule which is regulated under the Article 2 of the Turkish Civil Code2 (“TCC”). In this case, the differences in terms and conditions which occurred between the date of establishment of the contract and its execution date should be reflected to the contract, in other words the contract should be revised in line with these new terms and conditions. The theory which provides the most consistent and satisfying solutions about the adaptation of contracts should be accepted as collapse of the basis of the transaction3.If the necessary effort for the execution is disproportionate to the counter party’s benefits, the basis of the transaction are deemed collapsed4. War, economic crisis, soaring inflation, devaluation, extreme decrease of monetary value etc. can be given as examples of extraordinary circumstances which may cause imbalance in a contract. Since the strict application of pacta sunt servanda may cause many unfavorable outcomes, the Theory of Imprevision (Theory of Unpredictability) has been ensued. The Theory of Imprevision has grown into a theory that is consented by the doctrine and the Supreme Court as the adaptation of a contract in the event of collapse of the basis of the transaction partly or wholly.
The Theory of Imprevision is regulated with the headline of “Hardship” under the Article 138 of the Law of Obligations. According to the Article, elective rights are given to the debtor who faces the collapse of the basis of the transaction. The debtor will be able to request the contract to be adapted to the new terms and conditions, if this is not possible, the debtor will be able to renege on the contract. Reneging on the contract that is indicated here should be interpreted as the termination of the contract in terms of contracts of continuous acts.
Adaptation within the scope of collapse of the basis of the transaction should only be possible in the event of very rare and strict conditions5. Adaptation of a contract should only come to fore about an existing and established contract. In case of a dispute about the contract’s occurrence between the parties, this dispute’s prevention by adaptation is impossible. Since objective-based points determine the type and qualification of the contract and also require settlement between the parties as minimum factors, any gap on this field cannot be filled by adaptation6. For example, since it would not be possible to talk about a valid contract if a contract which requires formal condition does not conform to the form, the adaptation of a legally nonexistent contract will not be possible either.
To request the adaptation of a contract to new terms and conditions and if not possible, the use of termination right will only be possible when all of the following conditions are occurred together.
1. There Should Not Be Any Principle in the Law or in the Contract Regulating the Changing Conditions
The party who takes the risk of changing terms and conditions with a provision in the contract cannot dispose of that risk on the basis of good faith later. In the event of absence of the rules or clauses in relation to the adaptation in the contract or the law, the gap of adaptation in the contract occurs and in the event of a dispute, the judge has to fill this gap and adapt the contract to the changing conditions with his/her own legal principles. This kind of adaptation is named as adaptation of the contract to the changing conditions by judge ( judicial adaptation)7.
The judge has to keep the main basis of the contract and fill the gap of the contract in line with the parties’ common benefit.
To give an example subject to a Supreme Court decision, it is ensured that in a contract of work of a primary school construction, the Prime Ministry State Institute of Statistics’ indexes shall be applied; during the execution of the contract, fixed parameters shall not be changed with any reason. The claimant contractor’s request of changing the parameters including the progress payments is accepted by the court with the reason that the parameters were ensured with error in fact in the contract. However, the Supreme Court determined that the court’s decision is unjust according to the existence of the clause about parameters in the contract that is brought into force with the signature of the parties8 .
In spite of the fact that on one of its decisions dated 2012, the Supreme Court acknowledged the predication of absence of provision in the law or contract on adaptation of contract in changing conditions, it acknowledged that even if there might be a negative or positive adaptation inscription in the contract, the request of abiding by the contract that relies on this inscription might signify the abuse of rights according to the Article 2/2 of the Turkish Civil Code, therefore in the event of existence of extreme imbalance between acts, an adaptation can be made despite the presence of adaptation inscription9.
2. The Unforeseeable State of Emergency Has To Be Arisen After the Establishment of the Contract
The changings on the contract’s conditions should be unforeseeable (war, economic crisis, devaluation, natural disasters, prohibitions and limitations on imports and exports, depreciation on monetary, extreme rate of inflation etc.)10. The conditions which are the basis of the adaptation request has to be arisen after the establishment of the contract and the adaptation requesting party should not have foreseen these conditions during the establishment of the contract or not expected to foresee such conditions.
In some cases, especially when the claimant is a merchant, it is noted that the Supreme Court is on the opinion of dismissing the adaptation request, by stating that the obligation of “acting as a prudent merchant” involves the state of being prescient regarding the financial risks11. However, being a merchant should not be the sole reason to dismiss the adaptation request, if it is concluded that another merchant would not foresee the same changing conditions related to each concrete case being a
merchant should not be considered as a lack of unpredictability condition.
3. The Extraordinary Situation Should Not Be Originated from the Debtor that Has Requested the Adaptation
The party that has requested the adaptation (for the principle in the code, the debtor) should not be at fault in the changes of the terms and conditions. Since the term of “fault” is not included in the article directly, the existence of “imputability” shall be accepted as qualified12.
In the event that the party of the contract is in default,he/she may not request adaptation. The adaptation request of the party who is not at fault in default shall be possible in the event that he/she proves his faultlessness.
4. The Balance Between the Acts Incurred by the Parties Must Be Excessively Disturbed Contrary to the Good Faith
Article 138 of the Law of Obligations involves the term of “change of the terms and conditions that were existing in the execution progress of the contract to the detriment of the debtor to the extent that the execution request from him/her would be contrary to the good faith”. This condition comes to the fore when the performance requires extreme dedication for the debtor or becomes aggravated to the point that such performance is not expectable. In the event that hardship in performance exists in the execution progress of the contract but if it was not noticed by the debtor, the adaptation principles are accepted as inapplicable13, In that case, the cancelation shall be accrued to principles of mistake (Article 30 ff.) if their conditions exist, instead of Article 138 of the Law of Obligations. The subsequent hardship in performance does not have to be to the extent that it will cause the debtor’s bankruptcy or severe damage. The existence of “Change […] to the detriment of the debtor to the extent that the performance request would be contrary to the good faith” in the article is found sufficient. Certainly, for this evaluation, the counter party’s situation shall also be considered.
5. The Act Has To Be Either Not Executed or Executed by Preserving the Rights Arising from the Hardship in Performance
The performance of the act is determined as an indicator that the contract is adopted and that there is no hardship.
On a lawsuit about a claim of collection of receivable of cost difference as a result of the surfacing of the underground waters during a foundation excavation, the Supreme Court stated that the work was completed and there was no mental reservation on certificate of provisional acceptance therefore a request of adaptation was impossible, in its decision dated 201514.
III. REVIEW AND ADAPTATION LAWSUITS SPECIFIC TO THE CONTRACTS OF WORK
A. General Overview for the Contracts of Work
Contract of work is a contract which is established between the party ordering the work and the contractor, about a construction, maintenance or repair or fulfilling a duty in exchange for a cost that is predetermined and with an independent performance without the employer’s control and observance. It is regulated between the Article 470 and 486 of the Law of Obligations. Determination of the cost may come into question in many contract types. However, the most important factor that separates the contracts of work from the other contracts is the contractor party’s performance that he/she has incurred from the contract independently. Especially when it is considered that for the contract of employment, the person who provides the service or most commonly known as the employee performs the execution under the control and observance of the employer who can be seen as equivalent of contract giver, the mentioned distinctive characteristic of the contracts of work becomes apparent.
B. Fixed Cost
The cost in the contracts of work might be determined as fixed or approximate. The legislator has regulated two types of cost and enabled the parties to prefer one of these in compliance with the balance of interest15, Since the subject of our article is adaptation of the cost in contracts of work, the assessments regarding fixed cost shall be included. According to the Article 48016 of the Law of Obligations, fixed cost means that the cost of the undertaken work of contract of work has been determined beforehand and accurately. For the contracts that involve the fixed cost, even if the work requires more labor and costs than the foreseen, the contractor may not request fees to be increased.
The contractor’s close relation with the fixed cost pursuant to the Article 480 of the Law of Obligation is unfastened with the Article 480/2 which has an exceptional character17. In the event that completing the work may not be possible with the fixed cost due to the reasons that cannot be foreseen or that were foreseen but disregarded by the parties, the contractor may request an increased payment or termination of the contract18. The right to request adaptation or termination as a result of the hardship in performance in the contract that is conducted with a fixed cost is vested for the contractor. If the hardship in the contract has occurred from another reason other than the increase in expenses at a much higher rate than the anticipated, the adaptation request shall be made based on the Article 138 of the Law of Obligations as a general principle.
According to the Article 480/3 of the Law of Obligations, even the incurred costs of expenses and labor are less than the estimated costs after the determination of the fixed cost in the contract, the party ordering the work is obliged to pay the full amount of the determined costs.
While the abovementioned explanation about the adaptation of fixed cost in the contracts of work is generally valid, additional evaluations shall be rendered about specific points of the contract.
1. Conditions for the Adaptation of the Fixed Cost
a. An unexpected situation which cannot be foreseen or which was foreseen but not expected to happen should happen
The first point that should be emphasized here is that the extraordinary situation has to be persistent or long lasting not a temporary situation. Also for the contract period, the validity of the reason of the adaptation request requires special evaluation for each concrete case.
The Supreme Court evaluates the unpredictability and investigates the objective unpredictability’s existence for each case19. The extraordinary situation is required to be in an effective character to each prudent contractor that undertakes works in similar areas rather than only a concrete contractor.
b. The unexpected situation must have caused the hardship in the work’s completion with the fixed cost
An ordinary increase in expenses that the contractor would make during the execution is accepted as ordinary risks; therefore the contractor has to bear. On the other hand, the increase mentioned in the Article 480 of the Law of Obligations is an unpredictable, unaccounted for, extreme and extraordinary increase. The requiring factor according to the Article is the existence of a hardship in performance to the detriment of the contractor. As a result of the changing terms and conditions, the balance between the parties’ acts has to become disturbed extremely and clearly. It is not required for the mentioned imbalance to cause the debtor to go bankrupt; only clear and major imbalance will suffice.
c. The unexpected term should not be imputed to the parties and the contractor should not be at fault
In the event that the unexpected term is imputable to the contractor, the contractor has no right to request additional fees besides the fixed cost. The contractor should not be at fault for the unexpected terms and conditions. If the contractor has caused difficulty by his/ her own action, he/she cannot request adaptation of the contract to the changing terms and conditions.
d. The contractor should notify the existence of the unexpected term to the contract giver
The good faith requires the contractor to notify the situation to the contract giver without delay.
e. There should not be any principle in the contract that prevents the increase in the cost
The Article 480 of the Law of Obligations is a regulatory legal principle. Therefore the parties have opportunity to decide on the opposite of the Article in the contract. Nevertheless, even if the right of adaptation is dispensed, in the event that the degree of unexpected circumstance is on a level that is against the contractor’s economic entity pursuant to the Article 23 of the TCO or the good faith and fairness requires the adaptation, the request of adaptation shall be possible.
C. The Legal Scope of the Adaptation Lawsuits
The resolution of judge’s to the dispute by adaptation should be a substitute and vice solution in case the parties fail to agree20.
The judge shall consider the reasoning of judiciary in scope of the good faith instead of the involved parties’ possible requests in his evaluation of the fictitious will during the adaptation case. Therefore the decision should be based on an objective rule such as fairness instead of a subjective rule such as the parties’ wills. The aim on the adaptation lawsuit should be the fairly proration of the obligatory sacrifice that one of the parties have to endure between the parties.
.
IV. CONCLUSION
The main rule of the contract relation is abiding by the contract. Abiding by the contract in the event of the emergence of the situations arising after the contract’s establishment but before the execution that cause imbalance between the acts may cause unfairness. The foundation of the adaptation of contract is regulated to eliminate that unfairness. The adaptation of the contract which is valid for each type of contract in the existence of significant conditions in general sense is applied with some differences for the contracts of work. This difference is arising from the existence of specific principle about adaptation of the cost for contracts of work in the Law of Obligations. In order to be able to mention about adaptation of the cost for contracts of work, the cost should be determined as fixed cost in the contract. In addition to this condition, some factors are required to be determined according to characteristics of each case. The main evaluation of the adaptation is realized within the scope of the good faith. In the event that the adaptation is impossible, the opportunity of termination of the contract is ensured by the law. Firstly, the principal of keeping the contract should be acted on, when this is impossible; the option of termination of the contract should be chosen.
BIBLIOGRAPHY
Ahmet Kılıçoğlu, Borçlar Hukuku Genel Hükümler, Ed.16 , Ankara 2012.
Aydın Zevkliler/Emre Gökyayla, Borçlar Hukuku Özel Borç İlişkileri, Ed. 13, Ankara 2013.
Başak Baysal, Sözleşmenin Uyarlanması, Istanbul 2009.
Başak Baysal, “Aşırı İfa Güçlüğü”, Türk Borçlar Kanunu Sempozyumu, Ed. M. Murat İnceoğlu, Istanbul 2012.
Fikret Eren, Borçlar Hukuku Genel Hükümler, Ed. 14, Ankara 2012.
Hannes Rösler, “Alman ve Uluslararası Sözleşme Hukukunda Değişen ve Öngörülemeyen Koşullar”, Çeviren: Tülay Aydın Ünver, İstanbul Üniversitesi Hukuk Fakültesi Mecmuası, V.66, N.1, 2008.
İbrahim Kaplan, Hâkimin Sözleşmeye Müdahalesi, Ed. 2, Ankara 2006.
Kemal Oğuzman/Turgut Öz, Borçlar Hukuku Genel Hükümler, Ed. 11, Istanbul 2013.
Mustafa Alper Gümüş, Borçlar Hukuku Özel Hükümler, Ed. 2 , Istanbul 2012.
Rona Serozan, İfa, İfa Engelleri, Haksız Zenginleşme, Ed. 4, Istanbul 2006.
FOOTNOTE
1 04.02.2011 tarih, 27836 sayılı Resmi Gazete (RG).
2 08.12.2001 tarih, 24607 sayılı RG.
3 Başak Baysal, Sözleşmenin Uyarlanması, On İki Levha Yayıncılık, İstanbul 2009, s.94.
4 Hannes Rösler, “Alman ve Uluslararası Sözleşme Hukukunda Değişen ve Öngörülemeyen Koşullar”, Çeviren: Tülay Aydın Ünver, İstanbul Üniversitesi Hukuk Fakültesi Mecmuası, C.66, S.1, 2008, s.358.
5 Rona Serozan, İfa, İfa Engelleri, Haksız Zenginleşme, 4. Bası, İstanbul 2006, s.264.
6 İbrahim Kaplan, Hâkimin Sözleşmeye Müdahalesi, 2. Bası, Ankara 2006, s. 109.
7 Fikret Eren, Borçlar Hukuku Genel Hükümler, 14. Bası, Ankara 2012, s.482.
8 Yargıtay 15. H.D., T. 30.09.2015, E. 2014/7111, K. 2015/4627.
9 Yargıtay 3. H.D., T. 30.05.2012, E. 2012/8973, K. 2012/13817.
10 Kemal Oğuzman/Turgut Öz, Borçlar Hukuku Genel Hükümler, 11. Bası, İstanbul 2013, s.206.
11 Yargıtay 11. H.D., T. 17.11.2003 T., E. 2003/3979, K. 2003/10988.
12 Başak Baysal, “Aşırı İfa Güçlüğü”, Türk Borçlar Kanunu Sempozyumu, Ed. Murat İnceoğlu, İstanbul 2012, s.130.
14 13th Chamber of Supreme Court, decision dated 13.06.2014, numbered E.2013/16898 and K.2014/18895.
15 15th Chamber of Supreme Court, decision dated 13.11.2015, numbered E.2015/1637 and K.2015/5752.
16 Aydın Zevkliler/Emre Gökyayla, Borçlar Hukuku Özel Borç İlişkileri, Ed. 13, Ankara 2013, p.528.
17 Article 480 of the Law of Obligations: “In case the cost is regulated as fixed cost, the contractor has to complete the work with that cost. Even the work requires more effort and expense than the foreseen, contractor may not request the cost to be enhanced.”
18 Mustafa Alper Gümüş, Borçlar Hukuku Özel Hükümler, Ed. 2, Istanbul 2012, p.85.
19 Ahmet Kılıçoğlu, Borçlar Hukuku Genel Hükümler, Ed. 16, Ankara 2012, p.253.
20 15th Chamber of Supreme Court, decision dated 14.01.1999, numbered E.1999/4258 and K.1999/76.
21 Kaplan, p.156.
