Covid-19 Impact On the Contracts

1. Covid-19 Impact On the Contracts

One of the main principles of contract law is pacta sund servanda (sanctity of contract). However, concurring with this principle strictly in case of hardship, which is regulated in Turkish Code of Obligations Art. 138, might be contrary to equity of contract.

In Turkish Code of Obligations Art. 138 has been accepted the principle of “adaption of the contract”. Therefore, parties are entitled to adapt the contract in new circumstances or if not possible, they might terminate the contract.

It is an extraordinary situation for which the effects of the epidemic and its effects were not predicted before the contract and also not expected to be predicted. This is why Covid-19 can be considered as “force majeure” in such contracts. In the contracts made during the continuation and after the epidemic, it is accepted that the parties act by taking this situation into consideration.

 

II. The Case of Adaptation

In accordance with Article 138 of the Turkish Code of Obligations, the following conditions must be fulfilled together in order for the contract to be adapted by the judge:

• The extraordinary, unforeseen and objective occured situation must changed the circumstances of the contract,
• The unforeseen event must be occurred without any negligence of the disadvantaged obligor,
• Due to changed circumstances the expectation of the performance of the contract must become contrary to good faith,
• The disadvantaged obligor must not have fulfilled the obligation at the time of the adaptation request or if the obligation has been already fulfilled the obligor must have reserved the right to adaptations of contracts at the time of the fulfillment.

III. Court Decisions

Regarding Covid-19, a significant decision was made with the decision of the 4th Civil Chamber of the Bursa Regional Court of Justice, numbered 2020/1103 E., 2020/1008 K. and dated 28.9.2020. In summary, it was stated that after the effects of the epidemic and the measures taken were evaluated on the lessee, the burden of the contract should be adapted to the new conditions so that it was distributed over both parties of the contract. As a result of the judgment made, it was decided to reduce the rental fee as an interim injunction, on the grounds that the epidemic process experienced during the lease agreement signed between the parties created an unpredictable situation and serious damage could occur if the injunction is not given.

It should be noted that a request for an adaptation originating from Covid-19 has not been the subject of the Supreme Court decisions, and a decision in this direction has not been published yet. In such a case before the Supreme Court, it is stated that Covid-19 can be accepted as “force majeure” within the framework of the measures taken against the epidemic, on the basis of the specific characteristic of the case and after an evaluation of the effects of the measures.

Yazar : Avukat Yusuf Eren Yildiz