Abstract
The Turkish Code of Obligations Article 129 regulates the contract for the benefit of a third person in two different types: perfect contract for the benefit of a third person and imperfect contract for the benefit of a third person. This institution, which is effective on the promisee, the promisor and the beneficiary, has a uniqueness due to the fact that it may vary with respect the right to claim of beneficiary.
I. INTRODUCTION
Contracts for the benefit of a third person arise as an institution that is effective on a third person when obligatio generates, and the third person does not replace one of the parties at contractual obligations. A contract drawn up in this way shall be effective on persons who are named promisor, promisee and beneficiary. Despite not being a party to the contract for the benefit of a third person drawn up between the promisor and the promisee, the contract will be valid for the beneficiary, and according to the type of the contract which may be imperfect or perfect contract for the benefit of a third person, the beneficiary’s demands relating to the rightand fulfillment arising from this contract will vary.
Whereas in the perfect contract for the benefit of a third person, the beneficiary has a right to claim while the claims based on the fulfillment of this deed are reserved, he cannot have this type of a right in imperfect contract for the benefit of a third person. Although the promisee confers a benefit to a third person with the contract drawn up between the promisor and the promisee, this entitling will not get the third person become a party to the contract.
In this article, the rights and claims of a third person arising from a debt relationship are addressed, and the characteristics of the contract for the benefit of a third person and the differences with other similar institutions are explained.
II. Contract for the Benefit of A Third Person
A. Description and Conceptual Information
Debt relations are, as a rule, relative in Turkish law. Therefore, contracts, in principle, are applicable only between the parties participating in the contract, and do not affect third parties. However, our legal system grants the contracting parties the authority to influence third parties in some cases under the liberty of the contract principle.
Turkish Code of Obligations1 ” (“TBK”) No. 6098 presents a “contract for the benefit of a third person” as an institution which is effective on a third person, and the third person does not replace one of the parties at contractual obligations.
The contract for the benefit of a third person has been regulated in the Article 129 of the Turkish Code of Obligations as below:
“Where a party forms a contract pro se and adds an obligation to it in advantage of third party, he may demand the performance of the debt to that third party.
The third party and legal successors may demand the performance of the debt as long as it is suitable to the aim of parties or customs. Under these conditions, after the third party and his legal successors notify the obligor with respect to their demand on use of that right, the creditor cannot discharge the obligor or cannot change the characteristics or scope of the debt2.”
As it can be seen, if the creditor or the debtor party to the contract determines a deed for the benefit of a third person, who is not a party to thecontract, the contract is defined as a contract for the benefit of a third person. Contract for the benefit of a third person shall be effective on three persons: (i) promisor, (ii) promisee, and (iii) beneficiary3. Promisee may be defined as a party who makes the promisor accept to fulfill a deed for the benefit of a third person, promisor may be defined as a party who agrees and undertakes to fulfill an obligation for the benefit of a third person and beneficiary may be defined as a third person for the benefit of whom the other persons fulfill the obligation. Under the general debt relations, promisee shall be defined as creditor party and promisor shall be defined as debtor party. It should be noted that although the beneficiary is the party for the benefit of whom the other persons fulfill the obligation., contractual relationship will be established between the promisor and the promisee, thus the beneficiary is not a party to the contractual relationship. Therefore, declaration of intent is not required to draw up the contract and also there is no necessity to notify the beneficiary regarding the establishment of the contract4.
With regard to the contracts for the benefit of a third person, the following examples can be given: In a lease contract, determination of a person, other than a lessee, who will be seated in the leased area or that the lease price will be paid to a person other than landlord; in a contract of work, determination of fulfilling a work which belongs to someone else; in a contract of sale, condition of paying the price to a person other than seller; in a service agreement serving to a person other than the employer5.
B. Features
1. Not Being an Independent Contract Type
Contracts for the benefit of a third person do not constitute an independent contact type and for this reason it is not reguated under the special provisions of Turkish Code of Obligations. In other words, it covers the situations in which performance of deed to third person other than parties to the contract is stipulated, and it is be possible to arrange any typical or atypical type of contract in the form of contract for the benefit of third person. As an important consequence of this, the type of contract established for the benefit of a third person is determinant in order to find out whether there is any special requirement for the validity of contract. Parties may add a beneficial condition to contract they wish to establish, and they may also conclude a subcontract apart from the main relationship between them. In case of the contracts for the benefit of third person, the parties have to apply the rules which are articulated in law for the type of the contract the parties are willing to make6. For instance, whereas it is necessary to make the promise of gift for the benefit of a third person in written form, there is no form requirement for the validity of a lease contract.
2. Not Being Able to Dispose For The Benefit Of A Third Person
Promissory transactions are transactions causing an increase in the liability of assets and they include the acts of transfer, limit, burdening charge, change and undertaking of termination of the right that constitutes the subject of loan deed. However, dispositive transactions are transactions which have a direct effect on the right in assets of the person who disposes as well as transfer, amend, restrict and terminate that right. Dispositive transactions are usually done for the fulfillment of a deed which is undertaken by a promissory transactions7.Contracts for the benefit of a third person are considered as a promissory transaction. Although a contract that includes a commitment to make a dispositive transaction is possible, according to Oğuzman/Öz to make dispositive transactions such as transfer of ownership or claim, in principle, is not possible. The only exception is that the creditor agrees with anyone other than debtor to transfer the debt, in this way the debtor will discharge from the debt.
3. Third Person cannot be Burdened of any Debt
Due to the basic principles of the law of obligations, even if it is possible to entitle a right to claim to the third parties who are not a party to the contract by means of a contract, it is not possible to burden any debt to a third person by means of a contract without their will and consent. This rule is called “the contract prohibition to the detriment of the third person” in the doctrine8.
However, it may be decided in the related contract that the third person will have a right to benefit from the deed if the third person fulfills the determined condition.
4. Broad Interpretation of the Feature of Providing Benefit to a Third Person
Contrary to the opinion prevailing in the past, in order a contract to be a contract for the benefit of a third person, condition of existing a tangible deed that has an asset value is not required; all kind of fulfillment, non-fulfillment and giving commitments to be performed could be a subject of a contract for the benefit of a third person9.
5. Beneficiary is not a Party to the Contract
Although contracts for the benefit of a third person are effective in favor of the beneficiary, the beneficiary is not a party to the contract under no circumstance and does not take a part in drawing up a contract. Therefore, contracts for the benefit of a third person could be drawn up even if there is an absence of acceptance or knowledge of the beneficiary. For that reason, it would not be possible to assert the invalidity of the contract based upon a claim regarding if the beneficiary is incompetent or his intention is defective. On the other hand, the beneficiary has no right of objection with respect to the drawing of the contract; however, he has a right to reject the fulfillment of the promisor in accordance with the contract10.
6. Sufficiency of Being Specifiable as a Beneficiary
In order contracts for the benefit of a third person to be valid, it is not required to have and specify a beneficiary in the meantime the contract is drawn up; it is sufficient for the beneficiary to be specifiable11. As the contract is drawn up, it would be enough for the parties to agree on that the parties or somebody else will specify the beneficiary afterwards. The beneficiary could be a real person or legal person.
C. Types
Types of contracts for the benefit of a third person could be determined according to whether the beneficiary (third party) has a right to demand the fulfillment from promisor (debtor) or not. Thus, it is accepted that pursuant to the Turkish Code of Obligations Article 129 mentioned above, the imperfect contract for the benefit of a third person is a rule, perfect contract for the benefit of third person is an exception. The difference between two concepts has been explained in a Supreme Court’s related decision as following: “The main difference between them is that it is not possible for a third party to make a request from the debtor party in imperfect contracts for the benefit of a third person whereas it is possible in perfect contracts for the benefit of a third person12.
1. Imperfect Contracts for the Benefit of a Third Person
As it has been stated above, in accordance with the Turkish Code of Obligations Article 129/1 in which imperfect contracts for the benefit of a third person have been regulated, in case the promisee (creditor) makes them put a deed for a third party beneficiary in the contract, the beneficiary will not be able to demand the fulfillment personally. Only the promisee will be able to demand the fulfillment for the beneficiary from the promisor.
In the imperfect contract for the benefit of a third person, because the third party does not gain a right to claim, he has no right to demand the fulfillment of the deed owed in the contract. Third party is not actually a creditor, is only a beneficiary of the owed deed, an acceptor of the fulfillment to be made13.The beneficiary has an authority only to accept the fulfillment of the deed. However, it would not be possible for a third party to sue or to request compensation based upon the reasons regarding the contradiction to the obligation such as non-fulfillment of the deed or delayed or defective fulfillment. In the imperfect contract for the benefit of a third person, in the event the promisor does not fulfill his obligation at all or rightly, the fulfillment of the deed and the compensation of the damage in case there is a damage could be requested only by the creditor.
The promisee will be able to dispose on the right arising from the contract freely whereas the third party is not able to object to this situation. Since the beneficiary does not have a right to claim, concerning the assignment of the claim by the promisee to the third party, the third party does not have a power of disposition, but also does not have a right of objection in case the promisee acquits the promisor.
2. Perfect contract for the Benefit of Third Person
In Turkish Code of Obligations Article 129/2 in which the perfect contract for the benefit of a third person has been regulated, only if it fits the purpose of the parties or it is suitable to the custom, it will be possible for the third party to demand the fulfillment of the related deed from the promisor.
As it has been envisaged in the related Supreme Court’s decision14,“It is determined whether it is an imperfect or a perfect contract for the benefit of a third person in accordance with the provision envisaged in the Turkish Code of Obligations Article 129/2. Pursuant to that provision, either it must be written clearly in the contract that the third party could possibly make a request on his behalf or it must be possible to determine that situation according to the declared intentions of the parties or there must be a custom regarding that issue.”
In the perfect contract for the benefit of a third person, the beneficiary has a right to accept the fulfillment of the deed promised, but also (even if the third party is not a party to the contract drawn up) has a right to claim and thus he may demand the fulfillment of the deed. As soon as the contract is drawn up, the third party gains the right to claim directly and originally15.This is the most crucial distinction of the perfect contract for the benefit of a third person compared to the imperfect contract for the benefit of a third person.
As the consent of the beneficiary is not required for the origination of the right to claim, there is even no need to inform him. According to the nature of the perfect contract for the benefit of third person, even if there is a right to claim arisen for the third party, it does not mean that the third party becomes the party to the contract signed by and between the promisee and the promisor16.
In the perfect contract for the benefit of a third person, it should be accepted that the promisee has a right to demand the fulfillment, however it should not be forgotten that the related demand of the promisee is limited with the demand of the fulfillment made to the third party17. This is because the promisor incurs an obligation of the fulfillment only to the third party beneficiary. As it has been stated in the related decision of Supreme Court18,“… in both imperfect or perfect contract for the benefit of a third person, only the fulfillment of an obligation to the third party could be demanded.”
In accordance with the provision which is in the Article 129/2 of Turkish Code of Obligations, “after the third party or its successors notify the debtor that they would like to use that right, the creditor cannot acquit the debtor anymore, but also cannot change the characteristic and scope of the debt.”, in perfect contracts for the benefit of the third person, in addition to the debtor, the third party and its successors could possibly demand the fulfillment of the debt. As explained above, in the imperfect contracts for the benefit of the third person, only the creditor (promisee) has a right to demand the payment of the claim to the third party.
Pursuant to the priorly mentioned the Turkish Commercial Code Article 129/2, within the period of time until the beneficiary or its successors inform the debtor, in other words the promisor, that they will use the related right, the power of disposition on the right of the promisee will continue. Even if there are averse ideas in doctrine19,the law seeks that the notice should be made to the promisor. It will be possible to be made the notice explicitly or implicitly without depending on the form requirements. In accordance with the Turkish Code of Obligations Article 129/2, within the period until the beneficiary or its successors notify to debtor (promisor) about exercise the relevant right, promisee’s power of disposition remains on that right. Although there are averse opinions in the doctrine, notification to the promisor is required by law. It is possible implicitly or explicitly without form requirement. Before the third person’s notification to promisor about exercising the right to claim, the third person may not interfere that promisee makes savings on this right and shall not prevent that this saving will be effective on oneself. Accordingly, the promisee will be able to fully or partially discharge from this debt through acquittance by reaching an agreement with the promisor until the time of notification and will be able to amend the content and provisions of the right to claim as well. Following the relevant declaration, the promisee’s power of disposition will be terminated and its actions affecting the right to claim will become invalid to the extent that this right is affected.
The promisor may raise any objections or defenses arising from the contractual relationship between the promisee and the promisor against the third person demanding the fulfillment, on the basis of the contract concluded with the promisee20.
D. Difference of the Perfect contract for the Benefit of a Third Person From Similar Institutions
1. Representation
If we make a comparison between contracts for the benefit of a third person and direct representation; the represented party in direct representation and the third person in the contract directly acquire the right to claim arising from the contract even though they do not participate in the establishment of the contract21.However, there are significant differences between the two institutions.
In direct representation, the representative is not a party to the contract, even though he has drawn up the contract in the name and account of the person being represented; the person represented is the party tothe contract. In the contract for the benefit of a third person; the Promisee is the party to the contract, not a third person. First, the contract for the benefit of a third person is not legally defined as representation, since the Promisee is not a representative but acts on his own behalf and account. Secondly, in representation, the permission given by the represented or the subsequent authorization is essential for the representative to be able to act on behalf of the represented person. In the contract for the benefit of a third person, it is not necessary to obtain the consent of the third party beneficiary to draw up the contract, nor even for the beneficiary to know that a contract is concluded.
2. Assignment of the Claim
In the assignment of the claim, as a result of assignment of claim contract between assignee and assignor , transferee acquires the right occurred in the assets of assignor. In the case of a contract for the benefit of athird person, the right to claim arising from the contract between the promisor and the Promisee is not arisen in the presence of the Promisee and then assigned to a third person as it is in the assignment of claim. The claim is arisen directly in the presence of a third person who is not a party to the contract, due to the nature of the contracts for the benefit of a third person.
3. Remittance
Remittance shall be defined as a payment by a person (remitter) to another person (remittee), to a third person (to the remittance order recipient), and the dual authorization of the relevant third person to accept this payment22.
Unlike the contract for the benefit of a third person, a remittance may be defined as a unilateral authorization rather than a contractual transaction. Another difference between a remittance and a contract for the benefit of a third person is that while in a contract for the benefit of athird person, the promisor is liable for the fulfillment of obligation; in a remittancethe remittee is not liable, but rather authorized.
While there are differences between a remittance and a contract for the benefit of a third person, they also have a common trait. In both cases, the third party has the authority to accept the payment of the debt in his name, but while in a remittance this authority is arisen fromthe “unilateral will” of the remitter, in the contract for the benefit of a third person it is arisen from the contract between the promisor and Promisee23.
4. Transaction Without a Power of Attorney (Negotiorum Gestio)
In the “negotiorum gestio”, in case of activities carried out with the principal’s own interest, the principal shall be liable to compensate the damages and make payment for the costs specified in the legislation, therefore the principal cannot refuse these activities. However in the contract for the benefit of a third person, the third party may refuse the right established for their own benefit. In this context, the creditor shall not be regarded as the agent without authority. In addition to this, in the “negotiorum gestio”, the principal does not have a right to demand of fulfillment from debtor. But if it is a perfect contract for the benefit of a third person, the beneficiary has the right to demand of fulfillment besides the promissee.
5. Third Party Protective Contract
The extent of the protection obligations originating from the debt relationship in the third party protective contract is not limited solely to the parties to the contract. Even if the persons in the protection area of the parties are not parties to the contract, they benefit from the protective effect24.In other words, according to the institution of contract for the benefit of a third person, it has been stated that the protection obligations arising from the debt relationship are not limited only with the parties to the contract, but also some persons who are not a party to the contract will benefit from this protection25.
For example, although a lease contract is concluded between the lessor and the lessee, the lessor is also under a protection obligation with regards to the spouse and children of the lessee as they are included in the protection area of the contract.
In a decision by the Supreme Court26,this relationship has been based on the rule of the good faith:
“By means of protection obligations, a debt relationship that does not include any deed liability and only consist of protection obligations is formed between debtor and some third parties as it is between the debtor and the creditor. In other words, the debt relationship is effective on third parties and cause a protective effect on a third party and the basis of this relationship is Turkish Civil Code Article 2."
III. Conclusion
Contracts for the benefit of a third person, which are regulated in the Article 129 of the Turkish Code of Obligations and which are effective on the promisor (creditor), promisee (debtor) and beneficiary (third person); will affect the rights and demands of the beneficiary arising from the contract concerned, depending on whether the contract drawn up is perfect or imperfect.
Contracts that are effective on a third party who is not a party to the contract due to the existing triple relationship, shall only be drawn up for the benefit of a third person, in other words it may be arranged in a way that it will not obligate the third person. The most important thing about that the established contract for the benefit of a third person is a perfect or imperfect contract is whether a third person entitles a right to claim or not.
While in a perfect contract for the benefit of a third person possesses a right to claim, there is no such case in an imperfect contract for the benefit of a third person.
Unlike the usual contracts that obligate the parties, demands based on the right to claim of a third party outside the contractual relationship shows that it is necessary to examine institution of contract for the benefit of third person different from other institutions.
BIBLIOGRAPHY
Kemal Oğuzman/Turgut Öz, Borçlar Hukuku Genel Hükümler Vol.2, Istanbul 2017.
Fikret Eren, Borçlar Hukuku Genel Hükümler, 19th Edition, Ankara 2015.
Kemal Oğuzman/Nami Barlas, Medeni Hukuk, 23rd Edition, Istanbul 2017.
Şener Akyol, Tam Üçüncü Şahıs Yararına Sözleşme, 1st Edition, Istanbul 2008.
Serap Helvacı, Borçlar Hukuku Genel Hükümler Pratik Çalışmaları, Istanbul, 2017.
Çağlar Özel, The Turkish Code of Obligations, 1st Edition, Ankara 2013.
FOOTNOTE
1 Code of Obligations published on 04.02.2011, 27836 numbered Official Gazette.
2 Çağlar Özel, The Turkish Code Of Obligations, 1st Edition, Ankara 2013, p.175.
3 Fikret Eren, Borçlar Hukuku Genel Hükümler, 19th Edition, Ankara 2015, p. 1141.
4 Kemal Oğuzman/Turgut Öz, Borçlar Hukuku Genel Hükümler Vol.2, Istanbul 2017, p. 449.
5 Oğuzman/Öz, p. 446.
6 Eren, p. 1143 – 1144.
7 Kemal Oğuzman/ Nami Barlas, Medeni Hukuk, 23rd Edition, Istanbul 2017, p. 180.
8 Oğuzman/Öz, p. 447.
9 Şener Akyol, Tam Üçüncü Şahıs Yararına Sözleşme, 1st Edition, Istanbul 2008, p. 14.
10 Oğuzman/ Öz, p. 449.
11 Oğuzman/ Öz, p. 449.
12 Helvacı, qtd. p.235, 11th Civil Chamber of Supreme Court T. 10.06.2015, E. 2015/1742, K. 2015/8028 (Legalbank).
13 Eren, p. 1145.
14 Helvacı, qtd. p.236, Supreme Court Third Chamber dated 02.12.2014, numbered E. 2014/12033, K. 2014/15715 (Legalbank).
15 Eren, p. 1146.
16 Oğuzman/Öz, p. 453.
17 Eren, p. 1150.
18 Helvacı, qtd. p.235, 11th Civil Chamber of Supreme Court dated 07.04.2016, numbered E. 2015/8658, K. 2016/3866 (Legalbank).
19 Akyol, p. 190.
20 Eren, p. 1150.
21 Eren, p. 1147.
22 Eren, p. 1148.
23 Akyol, p. 63.
24 Eren, p. 1152.
25 Akyol, p. 47.
26 Supreme Court Assembly of Civil Chambers T. 6.5.1992, E. 1992/13-213, K. 1992/315.
