ABSTRACT
In this article, the terms of “suspensive condition” and “resolutory condition” which affects the entry into force and termination of an agreement have been determined. Also we have analyzed the effects of these concepts on an agreement and explained the exceptions that these conditions cannot be stipulated in an agreement. The concepts referred under this article have been clarified by considering the protective provisions of the legislator.
INTRODUCTION
The conditional obligations are regulated within the part on “Conditions” under part 2, section four of the Turkish Code of Obligations numbered 6098. According to Turkish Code of Obligations, there are two main types of conditional obligations: Resolutory condition which is the first type of conditional obligations that have been regulated under the Article 173 as “An agreement is tied to a resolutory condition, if the termination of such agreement is tied to an uncertain event which may either happen or not. Provisions of such an agreement will be revoked when the determined fact occurred. Unless otherwise agreed or required by the nature of the matter, termination will not have retroactive effect.” The wording of the Article determines that the agreement, whose termination depends on the occurrence of an unknown fact whether or not it will be realized in advance, is connected to the suspensive condition. According to the referred provision, the agreement will terminate when such uncertain event occurred. Provisions of an agreement which has been tied to a resolutory condition will be revoked, in the event that such condition occurred. Conditional provisions of an agreement enter into effect just like other provisions of the agreement before the event that triggers the condition happens and remain effective until such event. Suspensive and resolutory conditions are addressed separately in this article, and it will be examined and discussed here how our legislation addresses conditions that delay or terminate, legal prohibitions and preventive provisions and the effects of such provisions on entry into force or termination of an agreement based on Supreme Court decisions.
Moreover another important issue to mention is that prior to the Turkish Code of Obligations that came into effect on 11.01.2011 the word “provision” (şart) was used by both the legislation and the academic community, however the new code uses a more contemporary synonym of the word: “condition” (koşul). However, in order to include certain explanations and comments, in specific sections of this article the word “provision” was used.
II. CONDITION SUSPENSIVE AND CONDITION RESOLUTORY
A. The Term of Condition
Condition, in the context of the freedom of contract, allows the parties to be in an agreement that adopts the unforeseeable events that may occur in the later stages of the agreement1. The agreement will either enter into force or become void due to conditions according to the unforeseeable events. While a condition can affect an agreement completely, it can also be stipulated for specific provisions. There are two types of a conditional clause considering the context of the Code numbered 6098:
1. Suspensive Condition
A suspensive condition is present if the parties tie the effectiveness of the agreement either partially or fully, to a future event that may either transpire or not2.In that case, the agreement remains in force but take effect on the occurrence of the condition. In the case of conditional promissory transactions, the obligation will not arise before the occurrence of the condition3.Until the condition occurred, a suspension period is present. Both obligor and obligee have the right to demand performance, but they have to wait the occurrence of the condition4.There is also another regulation relating to Good Faith Principle under the Article 175 of Turkish Code of Obligations: If a party prevents the condition from occurring in violation of good faith, the condition will be deemed as occurred; meanwhile, if a party provides the occurrence of the condition by acting against the good faith principle, the condition will be deemed as not occurred5.
The Supreme Court has made a decision relating to condition suspense as: “The agreement includes a provision which states that ‘The agreement takes effect with the payment of all the above mentioned costs and deposit and with the signature of lessor.’ This provision constitutes a condition suspensive which protects the rights of the claimant/lessor. The defendant could not prove that he has performed his obligations stipulated under the above mentioned provision but the lessor did not accept such performance. Therefore, it must acknowledged that
the condition suspensive has occurred pursuant to Article 154 of Turkish Code of Obligations because the defendant/ lessee has not performed his obligations arising from the said provision against the good faith principle. Thus, the claimant/lessor can demand the rent for the period in which he kept the leased property available while reserving his rights under the referred provision6.”
Article 171/1 of Turkish Code of Obligations stipulates an additional obligation with regard to condition suspensive for the obligor. According to this article, the obligor must avoid any acts that may prevent the adequate performance of the obligation until the condition occurs. Third paragraph of the said article involves a rule which is also applied to resolutely condition by way of comparison. The Legislator, in this instance, renders all legal transactions that take place before the occurrence of the condition invalid for both parties of the agreement.
2. Condition Resolutory
Agreements which are tied to a condition resolutory are made as non-conditional agreements and take effect immediately7. Until the event specified in the condition occurs, these agreements take effect as normal agreements8.
An obligation in a promissory transaction which is tied to a resolutely condition arises with the performance of the transaction and becomes due and the obligee can demand performance, the obligor can be forced into performance and statute of limitations begins to run9.
In acts of disposal where the act is tied to a resolutory condition, rights in rem arise automatically. Therefore, when the agreement is revoked, all assigned rights will return to the party that initially assigned such right and all extinguished rights will arise again10. Acts of disposals such as quittance and transfer of claims can be tied to a resolutory condition. In such case, acquitted debts will be reinstated and transferred claims will return to their previous owner11.
Similarly to suspensive condition, a suspension period exists until the occurrence of the condition resolutory. However, unlike condition suspensive, a suspension period exists not in relevance to the entry into force but instead the termination of the agreement12. A notice and or the knowledge of the parties relating to the condition has occurred or not is not necessary for the termination of the agreement upon the occurrence of the condition13.
If parties did not agree upon a specific period in which the condition is expected to occur, there is no specific time stipulated under Turkish Code of Obligations for resolutory condition, except for the abuse of rights in defiance of good faith principle14.
The Code stipulates that the occurrence of the condition will have a proactive effect unless otherwise agreed by the parties or required by the nature of the matter. In agreements with resolutory condition involving continuously performed obligations, acts which are performed before the occurrence of the condition will not be void when the condition has occurred15. Agreements without continuous performance with resolutory condition are considered to be retroactive16. In such agreements, performed acts should be returned upon the occurrence of the condition. Otherwise, including a resolutory condition in the agreement would bear no practical importance17.
If any act of disposal which affects the provisions of the condition resolutory has been made before the occurrence of the condition, Article 171/3 of Turkish Code of Obligations which is stipulated for suspensive condition will apply to the resolutory condition by way of comparison and as mentioned above, invalidity of such acts of disposal can be claimed as long as the acquisitions of parties acting in good faith are not affected18. With this provision, it is aimed to remedy the situation of the aggrieved party, who received the performance, as the act will have no effect until the condition occurs19. However, this provision does not apply to the promissory transactions20.
Similar to suspensive condition suspensive, if a party prevents the resolutory condition from occurring in violation of good faith, the condition will be deemed as occurred; meanwhile, if a party provides the occurrence of the condition by acting against the good faith principle, the condition will be deemed as not occurred. (Article 175).
If it is not clear whether a condition is suspensive or resolutory, it is necessary to interpret the agreement. An interpretation which is made considering the free will of the parties and the nature of the agreement regarded as significant. If there is a conflict in the interpretation based on the based on the Trust Principle, the condition will be regarded as a suspensive condition in favor of the obligor21.
While interpreting the meaning of a declaration of intent based on the Trust Principle, all elements of the case at hand which the receiving party knows or should know based on all conditions and properties of the case must be taken into consideration22. Thus, both the receiving party’s trust in such meaning, and the trust of the party declaring his intent that such intent will not be misinterpreted, are protected23.
The Supreme Court for the thirteenth of circuit determines the condition suspensive and condition resolutory as “Conditional obligations are stipulated under Articles 170-176 of Turkish Code of Obligations. A condition is present if the effectiveness of an agreement tied to a future event that may either transpire or not. There are two types of conditions stipulated under Turkish Code of Obligations: condition suspensive and condition resolutory. If the effectiveness of an agreement is tied to a condition a condition suspensive, if the termination of an agreement is tied to a condition then a condition resolutory is present. The occurrence of a condition can be tied to the will of parties or a third party and or external facts. Agreements that are tied to a suspensive condition do bind the parties before the occurrence of the specified event. However, the effects of the agreement are only present after the occurrence of the event. Until the condition is triggered, provisions of the agreement are pending, the obligor has no duty to perform and the obligee may not demand performance24.
B. Prohibition of Condition
It is prohibited to tie some transactions to a condition under the Code numbered 6098. Some transactions relating to law of persons and family law, registrations to land registry under law of property, formative transactions under law of obligations, construction of mortgage notes and annuity bonds cannot be tied to a condition25.
An example to this would be the decision of Supreme Court Assembly of Civil Chambers which stated that: “In this context, definiteness is a fundamental element of a bill of exchange. Especially when considering its circulatory properties, all parts of a bill of exchange must be clear, unequivocal and not subject to interpretation. As noted by Öztan, issue of a bill of exchange is a legal transaction which cannot be conditional (Öztan F.; Kıymetli Evrak Hukuku II, Ankara 1997, p. 451). Accordingly Article 777 of Turkish Commercial Code, while stating that a bill that do not bear all legal requirements cannot be considered as a bill of exchange, also introduces default rules for maturity, place of issue and place of payment to prevent any legal gaps and thus strengthened the definiteness principle. Whereas it is acceptable to introduce certain terms such as the amount of interest, the competent court, immunity from protest and so on, any terms or conditions that violates the abstract and definitive properties of the bill of exchange, debases its negotiable instrument status before the law26.”
A provision does not exist which regulates such event that if there is a transaction with a condition which is not allowed to be tied to a condition. It should be deemed as completely invalid if there is such transaction with suspensive condition suspensive because the parties does not want the agreement takes effect before the occurrence of the condition. This is not applicable for those with a resolutory condition, because it cannot be claimed that the parties have a hypothetical intention to keep the agreement valid without the condition27.
This is not applicable for those with a resolutory condition, because it cannot be claimed that the parties have a hypothetical intention to keep the agreement valid without the condition28.
C. Protective Orders
Turkish Code of Obligations numbered 6098 states that if there is a condition in order to provide an act which violates law and ethics, such transaction which is tied to the said condition is null and void completely29.
If occurrence of an event is impossible and such event is determined as a condition suspensive, the transaction is void completely30. For example, a time machine is an unreal fact as an impossible condition. However, if such a condition is determined as a condition resolutory, the transaction which is tied to that condition will remain valid as if there is no such condition31.
There is not any specific regulation under the Code pertaining to illogical or disturbing conditions except for testamentary dispositions. Such conditions will remain valid if a testamentary disposition is present32. However, in the case of a condition like this, it can be claimed that the intent was not reasonably serious and the agreement is not enforceable33.
III. CONCLUSION
The term condition in the context of Turkish Code of Obligations allows the parties to be in an agreement that adopts the unforeseeable events that may occur later on. A condition suspensive is present if the parties tie the effectiveness of the agreement either partially or fully, to a future event that may either transpire or not. On the other hand, a resolutory condition is present if the termination of the agreement is tied to a future event.
An agreement which is tied to a resolutory condition will terminate upon the occurrence of the condition. There is a suspension period until the condition occurred and at the end of this period, the agreement will not remain in force. The occurrence of the condition will have a proactive effect unless otherwise agreed by the parties or required by the nature of the matter. But if there is an agreement without continuous performance, all assigned right will be returned when the condition occurred.
If it is not clear whether a condition is suspensive or resolutory, it is necessary to interpret the agreement through the principle of truth. While interpreting the agreement, free wills of the parties and the nature of the agreement is considered. But if there is still a conflict on this matter, the condition will be regarded as a suspensive condition in favour of the obligor.
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FOOTNOTE
1 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1161-2 “Stipulation is a legal entity to expand the scope of the declaration of an intension. The baseline of the authorization establishing an obligation and transaction which depended on the stipulation should be determined in the freedom of will and freedom of contract.”
2 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.498.
3 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.506.
4 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1175 “…”
5 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1178.
6 Supreme Court 14th D. 07.12.2010, E. 2010/11007, K. 2010/13618.
7 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.514.
8 Orhan Gürgen, “Şarta Bağlı Özel Hukuk İşlemlerinin Vergilendirilmesi, Yaklaşım Hukuk”, Istanbul 2012.
9 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.514.
10 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1177 “In the acts of disposal which depend on the dissolving condition, occurrence of the condition causes real consequences. The right of property which has already been transferred and right of claim return to the transferor party without need to any transaction, in other words, the right returns, the obligation which has been discharged with a condition refreshes automatically.”
11 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.517.
12 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1175.
13 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.514.
14 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.515.
15 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1178.
16 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.516, footnote 374.
17 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1178.
18 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.517.
19 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.508.
20 Tekinay, Selahattin Sulhi, Sermet Akman, Haluk Burcuoğlu ve Atilla Altop “Borçlar Hukuku”, 7th Edition, Istanbul 1993, p.334 “For example, if I sell and deliver a good which I have already sold to you with a condition before the occurrence of the condition, the property is passed unconditionally; although the condition will occur on behalf of you later, this act of disposal which has been made on behalf of another individual is completely valid.”
21 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1172.
22 Kemal Oğuzman ve Nami Barlas, “Medeni Hukuk”, 22th Edition, Istanbul 2016, p.296.
23 Kemal Oğuzman ve Nami Barlas, “Medeni Hukuk”, 22th Edition, Istanbul 2016, p.297.
24 Supreme Court 13th Civil Chamber D. 22.02.2016, E. 2015/2709, K. 2016/5165.
25 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1167.
26 Supreme Court Assembly of Civil Chambers, D. 07.06.2017, E. 2017/12-330, K. 2017/1088.
27 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.502.
28 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.502.
29 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1168.
30 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.503.
31 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1168.
32 Fikret Eren, “Borçlar Hukuku”, 18th Edition, Ankara 2015, p.1169.
33 Kemal Oğuzman ve Turgut Öz, “Borçlar Hukuku II”, 10th Edition, Istanbul 2013, p.504.
