ABSTRACT
The contract of work which has been regulated between the Articles 470 and 486 of the Turkish Code of Obligations numbered 6098 (hereinafter referred to as “TCO”) is a type of synallagmatic and consensual contract in which the contractor undertakes an obligation to perform a work while the employer which is the other party to such agreement is obligated to pay the fee for the work. Among the related articles, various obligations of the contractor related to the work has been regulated and as per the first paragraph of Article 477 of the TCO such obligations related to the work of the contractor shall be terminated after the implicit or explicit acceptance of the work by the employer. In this article, conditions of the delivery of the work, procedures for the acceptance of the work and liability of the contractor for the defective work has been analyzed.
I. INTRODUCTION
Contracts of work are type of contracts that are regulated within the TCO and where the contractor is obliged to create a work.
With the definition made in the TCO, inaccurate terms like “against price” and “production of something” which used for the contract of work in the abolished Turkish Code of Obligations numbered 818 have been fixed. The term “price” is often used to define the cost of goods. Moreover, “something” in the “production of something” is actually refers to “work” and it is more appropriate to use “create” rather than “production” due to fact that changes to be made to an existing work can be subject to contract of work1.
The scope of “work” which defined in TCO has not specified. Turkish Language Society, has defined the work as “the product created by labour, artwork"2. So indeed, in the doctrine, a creation of work which can be determined objectively and is a material or intangible result due to a specific work would be a subject to contract of works3. Accordingly, including construction of a building situations like placing an ad on the newspaper, filling the teeth, a project created by an architect, fireworks show would also considered as a subject to the contract of works.
Within the scope of TCO, there are 7 (seven) obligations of the contractor in contract of works. These obligations are as follows; (i) carrying out the work with adherence and diligence, (ii) carrying out the work directly by himself/herself, (iii) procurement of equipment and material, (iv) notification as general, (v) commencing the works timely and continuation the work thereafter. The other 2 (two) obligations of the contractor, which are also subject to this article, are delivery of the work which has created by him/ her and contractor’s liability for the defective work. In this regard, in this article, firstly, conditions for the valid delivery of work in contract of works will be examined and then acceptance of the delivered work by the employer and provisions in case of employer rejects the work due to defective or incomplete work will be dwelled on. Lastly, reviewed subjects will be evaluated.
II. DELIVRY OF THE WORKIN CONTRACTOF WORKS
Conditions of the delivery for the work by the contractor, or even obligation of the delivery itself, is not regulated in the TCO. However, in the doctrine, due to concept of “delivery” mentioned in various articles of TCO, it is accepted that in addition to contractor’s obligation to create the work, contractor’s obligation to deliver the work is its principal obligation4. In practice, it is observed that various mechanisms has been developed regarding the delivery of the work. For instance, for the delivery of the work within the scope of the contract, twostage mechanisms such as "completion" and "final completion" are established, as well as only onestage acceptance mechanisms.
In addition, within the scope of TCO, delivery of the work to the employer free of any defects is one of the primary obligation of the contractor. Accordingly, it is not sufficient to merely deliver the work to the contractor in order to discharge from this liability but also the work should not contain any defects at the same time. With the delivery of the work to the employer free of any defects and acceptance of such work by the employer, contractor’s liability regarding the work is terminated and employer is become liable for such work. However, even though acceptance of the work performed by the employer, as per Article 477 of the TCO, contractor is still be liable for the hidden defects contained in the work.
Employer may always avoid to receive the defective or incomplete work. With this, employer can the contractor in default and may use its elective rights granted to him as specified in the TCO. However, if employer receives and accepts the work even if it is defective, contractor’s obligation to deliver the work and liability to defective work terminates. In this respect, it is important to determine the received date of the work and time of performance.
Unless otherwise specified in the contract, general principles of the TCO shall be applied on determining the delivery date of the work5. In Article 89 of the TCO, it is regulated that specific obligations (obligations involving a nonsubstitutable item) will be executed at the subject obligation’s place when the contract is established. From this point of view, one can state that delivery of the works regarding immovable property will be executed at the place of such property. Delivery of the work for the movable property will be considered as executed when possession of such property transferred to employer. In case of materials used in the creation of the work supplied by the contractor, both possession and ownership of the work must be transferred to the employer6.
The delivery date of the work usually set out in the contract. However, in case of such time does not specified in the contract, Article 90 of the TCO shall be applied. According to the relevant article, all obligations become due at the time of birth of such obligation. However, as specified in Article 90 of the TCO, while determining the due date of the obligation, one must take into consideration the legal relationship between the parties. Thus, it is hard to state that obligation of the delivery of the work is become due at the time of contract is established, due to nature of the contract of the work. If the parties did not specified the time of performance within the contract, this gap will be filled in accordance with the nature of the work and parties’ hypothetical intention. While doing this, the time that an expert will normally spend in order to finish the work during the creation of the subject matter will be taken into account7.
Subsequent to delivery of the work in to the employer in accordance with the contract and the TCO, employer shall be liable for all risks and benefits of the work. Moreover, as per Article 479 of the TCO, with the delivery of the work, employer’s obligation to pay the price regarding the work will become due.
III. ACCEPTANCE OF THE WORK IN CONTRACT OF WORK
Acceptance is a declaration of intention which can be declared by employer and consists that work does not include any defect, it is in accordance with the contract and work is suitable for the purposes specified in the contract. With the acceptance of the work employer declares that work does not consists any defects and employer shall not claim any defect related to the work. However, even the work is accepted by the employer as explained below, the contractor’s liability for the implicit defects will continue.
As per Article 474 of TCO, upon the delivery of the work, the employer shall examine such work as soon as possible with regards to the natural flow of life and if an implicit defect is determined, the employer shall inform the contractor within a reasonable time. Article 477 of TCO regulates that the work may be accepted either by an implicit or explicit declaration of intent8. In this respect, besides being able to accept the work by an explicit declaration of intent, the employer may also accept the work explicitly. It’s important to note that if the employer fails to examine and inform the contractor about the implicit defects, the work will be deemed as accepted.
At this point, it is necessary to mention the actual use of the work as to the acceptance of the work with an implicit declaration of intent. In some of its decisions, the Turkish Court of Cassation concludes that the actual use of the work may be an assumption for the acceptance of the work even if the intent of acceptance isn’t declared9. Accordingly, the actual use of the work without an implicit or explicit declaration of intent maybe be interpreted by the Court as an acceptance of the employer. More than that, in case of the employer utilizes the work and then he/ she claims that the work hasn’t been accepted, it can be considered as a breach of the rule of good faith regulated in Article 2 of the Turkish Civil Code. Nevertheless, it’s important to mention that this approach of the Court of Cassation is not absolute, meaning that the actual use is not always equal to the acceptance. For instance, in a court case related to the deficient delivery of subway construction, the Turkish Court of Cassation stated that even the payments of progress and the finalization of invoices do not necessarily mean the work has been delivered10. In this regard, each case should be separately evaluated within its own circumstances to determine whether the process of acceptance has concluded or not.
The acceptance of the work by the employer ends the obligations of the contractor. However, if the work isn’t accepted by the employer due to the defect and the conditions of the liability of the contractor listed between Article 474 and 478 of TCO are fulfilled, the contractor may be held responsible.
Another confusion confronted in practice is about detecting whether a work which has been delivered is defective or it is incomplete. In contracts of work, it’s crucial and as difficult to distinguish between these two terms. While the Court of Cassation defines defective work as the absence of qualities that should normally exist or work with features that should not exist according to the contract or the provisions of the law, incomplete work is defined as the work that has never or partially never been done11. In the same decision, the Court stated that an expert’s report is needed to determine which situations originate an incomplete work.
Additionally, another point to mention is the divisibility of the main subject of a contract of work. For incomplete work to exist, the work subject to the contract should be divisible. In other words, if the completed part of the work can be separated from the incomplete part and used independently, the employer may claim an incomplete work12.
The legal consequences of the defective work and the incomplete work are explained below:
A. Defective Fulfillment
If the delivered work doesn’t comply with the qualifications stipulated in the contract of work or does not have the necessary qualifications to be present in the work in accordance with the principle of trust, it will result in the defectiveness of the work and the contractor will be responsible in accordance with Article 474 and 478 of the TCO. In this case, the employer is not obliged to accept the work and he/she may apply to the contractor for the removal of the defects as per Article 475 of TCO.
Hereby the defective performance should be determined. In Turkish legislation, defects about the work can be gathered under two headings. These defects are as follows:
Explicit Defect: Explicit defects are those that can be noticed by an examination after the delivery of the work. The liability of the contractor for such defects ends with the acceptance of the work by the employer. In the event that such defects are detected, the employer may exercise optional rights specified in article 475 of TCO. These optional rights as follows:
i. revocation of contract ii. receiving the work as delivered and requesting a discount iii. requesting the removal of the defects unless it costs unproportioned amount According to the Article 478 of TCO, the abovementioned rights of the employer for the works delivered defective expire after i. 2 (two) years in movable structures, ii. 5 (five) years in immovable structures and iii. 20 (twenty) years regardless of the nature of the work in cases where the contractor is in seriously defective.
Implicit Defect: The implicit defects are those that can not be revealed after control or an examination to be made on the work and can be only noticed after the use of the work or the defects hidden in the work by the contractor intentionally. The liability of the contractor in terms of these defects continues even after the acceptance of the work by the employer. However, according to the paragraph 3 of article 477 of TCO, the employer shall notify the contractor without delay after the implicit defects appear, otherwise it’s deemed to have accepted the work.
B. Lack of Fulfilment
AAnother common situation in practise is the incomplete performance of the contractor in terms of work. In the case of incomplete performance, there is no completed and delivered work. The situation here is that the works that are justifiable expected from the contractor have never been done.
What is the defective work is not defined in the laws, to determine it is left to the jurisprudence and doctrine. According to the Court of Cassation, the defective work in contracts of work is defined as “the work which is not done in the amount shown in the project with the contract and its annexes, or some of the manufactures not made but have been agreed to be made or that should be made due to the nature of the work and whose current version is accepted by the employer"13. In the continuation of the same decision, it is stated that the costs of the defective work can be requested at any time during the period of limitation, without the need to submit a reservation claim. It is even stated that there will be no interpretation that the employer is deemed and may not ask for the costs of the defective work due to the fact that the employer made temporary and definitive admissions without reservation and is delayed in giving a warning.
In the event that the work is incomplete, the employer cannot use the elective rights specified in Article 475 of the TCO. This is because the abovementioned alternative rights can only be used in cases where the relevant work is “defective”.
The employer can remedy the losses caused by the contractor’s incomplete work in accordance with the general provisions of the TCO. In this context, in accordance with Article 125 of the TCO, the employer, due to the losses caused by the incomplete work of the contractor may use the alternative rights listed below:
i. To request the same performance of the debt (in other words, requesting the completion of the incomplete work) and requesting the compensation of the damage caused by the delay of the performance of the debt. ii. To revoke the contract and request compensation fort the loss arising from the nonperformance of the debt.
At the same time, the statute of limitations regarding the use of these alternative rights will be subject to the periods specified in Article 147 of the TCO. Accordingly, receivables arising from the failure of the contractor to fulfill its obligations are subject to a 5 (five) year of the limitation period. Receivables to be claimed by the employer due to incomplete work will also be subject to the relevant 5 (five) years of limitation.
IV. CONCLUSION
Contracts of work are amongst the types of contracts frequently encountered in practice and are widely used in many areas. In this regard, it’s very important to determine under which conditions the work can be accepted and whether the work is defective or incomplete and to clarify the results connected to them.
In our article, first of all, the difference between delivery and acceptance of the work is specified. It has been determined that the delivery of the work to the employer by the contractor doesn’t mean the acceptance of the work by the employer and the contractor will continue to be under obligation for the work even if the work is delivered. With the delivery of the work to the employer, the owner is obliged to examine the work according to the usual flow of the works and report any defects if exist.
Secondly, the acceptance of the work is emphasized. Acceptance of the work can be made with the explicit or implicit declaration of intent of the employer. Accordingly, the employer can verbally acknowledge that he/ she accepts the work as delivered to him/ her with a report to be signed regarding the work. Also, the actual use of the work by the employer may mean acceptance of the work.
In case the work is defective, the employer should report this to the contractor without delay. If the work is defective, the employer may use one of the alternative rights to revoke the contract, the receive the work as delivered and to request a discount from the price, to request the removal of the defect in the work provided that it does not require excessive costs. In order for the Principal to exercise his/her alternative rights in Article 475 of the TCO, the delivered work must not comply with the qualifications stipulated in the legislation and the contract.
However, if the work is a work that can be used by dividing and the divisible part is not delivered to the employer at all, in other words, if a work is not performed at all, the employer will be able to compensate the damages according to the general provisions in the 125th article of the TCO instead of the alternative rights in the 475th article of the TCO. The reason for this is that the alternative rights listed in Article 475 of the TCO can only be used in the event that the work is defective. In the absence of work or work that has been delivered and completed, the existence of a defective work cannot be mentioned, and therefore, the alternative rights regarding the defective work cannot be exercised. In right to demand compensation for the damaged caused by the delay of the execution of the debt and the delay of the execution of the debt pursuant to Article 125 of the TCO, or to claim the damages arising from the failure of the debt by revoking the contract.
BIBLIOGRAPHY
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FOOTNOTE
1 Reason of the Turkish Code of Obligations numbered 6098 – Article 470.
2 sozluk.gov.tr Date of Access:17.06.2020.
3 Yavuz, Cevdet (2019). Borçlar Hukuku Dersleri (Özel Hükümler). İstanbul, Beta Yayınları. s. 544.
4 Yavuz, Cevdet (2019). Borçlar Hukuku Dersleri (Özel Hükümler). İstanbul, Beta Yayınları. s. 562; Yılmaz, Suha. (2019). Eser Sözleşmelerinde Eseri Teslim Borcunun Vadesi. Master Thesis, Galatasaray Üniversitesi Sosyal Bilimler Enstitüsü, İstanbul.
5 Yavuz, Cevdet (2019). Borçlar Hukuku Dersleri (Özel Hükümler). İstanbul, Beta Yayınları. s. 562.
6 Yılmaz, Suha. (2019). Eser Sözleşmelerinde Eseri Teslim Borcunun Vadesi. Yüksek Lisans Tezi, Galatasaray Üniversitesi Sosyal Bilimler Enstitüsü, İstanbul.
7 Yavuz, Cevdet. (2019). Borçlar Hukuku Dersleri (Özel Hükümler). İstanbul, Beta Yayınları. s. 563.
8 Köseoğlu, Can Barış. (2017). Eser Sözleşmesi Kapsamında Ayıp ve Bildirimi. Çağ Üniversitesi Sosyal Bilimler Enstitüsü, Mersin.
9 Yargıtay 21. HD. E. 2008/7313 K. 2008/8470 T. 3.6.2008; İstanbul BAM, 15. HD. E. 2019/12 K. 2019/375 T. 26.3.2019; İstanbul Anadolu
9. Asliye Ticaret Mahkemesi, E. 2018/575 K. 2019/387, T. 16.4.2019
10 Yargıtay 15. HD. E. 2014/3272 K. 2014/5970 T. 22.10.2014
11 2014/5941 T. 25.9.2014
12 Gür, Mustafa. (2016). Arsa Payı Karşılığı İnşaat Sözleşmesinde Eksik İfa ve Ayıplı İfa Kavramları. Yüksek Lisans Tezi, Yaşar Üniversitesi Sosyal Bilimler Enstitüsü, İzmir.
13 Yargıtay 15. HD. E. 2011/485 K. 2012/1218 T. 1.3.2012
