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Legal ReviewIN CASE OF A FAILURE TO ARRANGE THE ZONING STATUS FOR A CONSTRUCTION AGREEMENT OR CANCELLATION OF THE CONSTRUCTION WORKS BY THE LOCAL ADMINISTRATION, THE CONTRACTOR’S LIABILITY TOWARDS THE CLIENT AND FURTHER CONSEQUENCES REGARDING THE AGREEMENT

Şubat 24, 2015by admin

In Turkey, due to the frequent changes of construction regulations and plans, the performance of an agreement may become unfulfilleable or impossible, because of the failure to obtain required licenses after the conclusion of the contract or cancellation of the construction works by the local authorities. In such cases, the answers to the questions “What will be the liability of the contractor?” or “Who will indemnify for the losses of client?” or “How will this incident affect the agreement between the undersigning parties?” shall vary upon two different schemes. The schemes determining the answers to those vital questions are, first, whether the unfulfilleability was evident before the conclusion of the agreement and second, whether the impossibility is caused by the legal negligence of the parties.

According to the abovementioned classification;

The party who is aware of the fact that the subject of a construction agreement is impossible during the conclusion phase but does not warn the opposing party is liable for “culpa in contrahendo”; in other words, the “fault occurred during contractual negotiations.” The jurisprudence generally accepts that, in case a party is aware of the fact that the subject of the agreement is impossible to attain, therefore the agreement is invalid but fails to warn the opposing party, then he should be liable to indemnify for the opposing party’s losses and damages . The “Culpa in contrahendo” liability can be faced in various aspects. Some of them are provided by the Law (Turkish Obligations Code, Art. 31/para.2, Art. 26, Art. 39), and some of them take place in the practice through case law, in parallel with the doctrinal opinions .

As early as the contractual negatiations phase, the subject of the construction agreement may be against the construction regulations or plans. In this case, the acknowledgement of a party shall appear to be “culpa in contrahendo” liability and the agreement shall be considered to be invalid. In case both parties are unaware of the impossibility, then the agreement will be null and void, due to the “objective impossibility from the very beginning,” pursuant to Art. 20 of Obligations Code . Therefore, the agreement shall not arise any obligations and/or rights for the client. Another point to be stressed on is, for an impossibility present during the agreement’s conclusion to affect the contract’s validity, it should be an “objective impossibility” . That is, the subject of the agreement should not be impossible only for the undersigning parties, but for everybody. If the construction agreement is null and void due to the objective impossibility from the very beginning, then it is accepted both by the doctrine and the case law that, the parties cannot claim any reparations from each other and each party shall return whatever they have taken from each other, in terms and conditions of the unjust enrichment. In case of a “subjective impossibility” specifict to the parties, this shall not affect the validity of the construction agreement qualifying as an indebiting agreement .

If the legal impossibility appears after the valid conclusion of the agreement, then, both the agreement itself and the parties are affected from the impossiblity, depending on whether the impossibility happened to be the case due to any party’s fault or not.

Accordingly, if the inability to arrange the zoning status or construction license is caused by the contractor’s fault, (for example, if the contractor has applied in such a manner to contradict the Article 22 of the Law on Construction #3194, providing the conditions for obtaining a license or the contractor does not perform its duties according to the project determined by the construction agreement and caused failure to obtain upper building foundation license or cancellation of the already started construction) then, the performance impossibility is out of question. The contractor has to correct the contradictory sections to the project and the construction regulations and duly perform its obligations. Otherwise, it shall be liable pursuant to Art. 96 of the Obligations Code . Besides, in terms of a delay caused by the contradiction to the project of the construction agreement or construction regulations, the client shall be entitled to have the contractor in default and recede from the agreement, pursuant to Art. 106-108 of the Obligations Code .

It should be noted that, in Turkish Obligations Code, the performance impossibility caused by the debtor is not explicitly provided for. Therefore, the liability to indemnify the creditor’s losses and damages shall be subject to the provisions of Art. 96 of Obligations Code. At such cases in which the debtor is not responsible from the impossibility, Art. 117 of Obligations Code shall apply and the debt shall come to an end . But, we notice that, at Article 371 of Obligations Code, on the service contracts, the case of faultless impossibility is especially provided. According to the Article, in case the contractor dies or fails to complete the works without any faults attributable to himself, the service contract is terminated automatically if it is concluded considering the contractor’s personality. The phrase of “fails to complete the works without any faults attributable to himself” means the faultless impossibility. However, the second paragraph of the same article provides that “in this case, if the built section is usable, then the client is obliged to accept and pay for it.” This expression is an exception to the general impossibility clauses stated by second paragraph of Article 117 of Obligations Code, which provides the parties returning their acquisitions from each other, upon provisions of unjust enrichment . This exception is to be considered especially important for the construction agreements. Because, since the housing permit cannot be obtained for an unfinished building, the abovestated article shall always remain “inapplicable.” However, such an implication is against the purpose of second paragraph of Article 371 of Obligations Code. Therefore, here the “usability” should be extensively interpreted and understood as “to be value of the client.” In case of a faultless impossibility, if the completed section is somehow to the value of the client, then the proportional contract amount should be paid to the contractor.

If the conractor fails to obtain the license for the construction works or the already started works is cancelled by the administration because of to the violation of the project, due to any fault attributable to himself, then, the client’s opportunity to have the contractor in default or choose to denounce the agreement, out of his optional rights, depend on the maturity of the debt forming the subject of the construction agreement . In other words, since a deferred debt cannot be subject to any violation, except for the provisions stated by Article 82 of Obligations Code (providing the denouncement right for cases in which the opposite party is insolvent, bankrupt or the execution proceedings happen to be unsatisfied), the due date should be waited for, upon the general provisions of Obligations Law.

If the works are cancelled permanently for any construction due to a change at ground plans, which has initially started according to the upperground license obtained throught the present construction regulations, in other ternms, the act becomes infulfilleable after a legal impossibility which occurred after the conclusion of the agreement, then, two different consequences should be considered thoroughly: first, the effects of present impossibility on the parties and second, the relations between the administration which has changed the ground plans.

Article 117 of the Obligations Code provides that, in case of a legal impossibility which occurs after the conclusion of the agreement, without any fault or error attributable to any of the parties, the debt of the party whose act happens to be impossible shall come to an end . Moreover, the second paragraph of the mentioned article states that, if debt of a party comes to an end due to the impossibility of fulfillment, the opposite party shall also be released, in other words, the party who is released from its obligations due to the impossibility of the act shall also lose his claims from the opposite party. If the party, whose debt’s fulfillment is impossible, has collected his credit in advance, then he is obliged to return the acquired amount upon the provisions of unjust enrichment . According to the case law provided by the Turkish Supreme Court, upon the provisions of unjust enrichment, for the actions filed by the contractor, the contractor is entitled to claim the surplus value created at the property of the client, but he cannot claim for deprived profit. .

As for the relations between the administration which changes the ground plan and the parties, we can declare that, the status of the rights acquired by the parties before the change and the validity of the already taken construction licenses are important issues to be considered of. First, we have to say that, the administrative deeds lead to propelled effects and results. An exception of this rule is the “recovery” deed and in this case, the posterior administrative deed causes retrospective effects and results, whereas in general, when a change is made by an administrative deed, the “change” is valid after the execution date. Since the ground plans are regulatory deeds, they do not grant any rights as a general rule. In other words, any vested right cannot be claimed based on a previous ground plan. The right arising deeds (such as giving a construction license) are individual administrative deeds. If the change of the ground plan affects the individual administrative deeds, then only in this case the principle of respecting the vested rights shall apply. In practice, the Turkish State Council had conflicting decrees about this issue for such a long time. At a decree given by the State Council in 1983, it had decided that “… since the building which was built according to the previous plan and whose two storeys constitute a vested right happens to be relocated at a public zone due to the new ground plan, the cancellation of the license for the third storey is not inaccurate …” , but at a decision given in 1984, it had decided that “… since a change is made at the gronud plan and the number of storeys have been decreased, there is not any inaccuracy for the termination of the works for the building which was built according to the license given before the plan’s change, whose 4th storey’s column was built …”.

Recently, the State Council’s judgments on this issue have been regularized and it is assumed that, the actually built sections and floors that are built according to the present construction and occupancy licenses shall be protected, upon the principle of respecting the acquired rights. While determining the scope of the acquired rights, the State Council does not only consider the fact whether the construction license is obtained according to the valid construction regulations or not, but the amount of the actually built parts of the building, which is constructed according to the construction license .

Besides, the State Council emphasizes that, the financial and moral losses suffered by the parties due to a change of the ground plan has to indemnified by the related municipality, because of the principle of administration’s obligations, but in case a construction license given by the administration and construction Works which have started accordignly are nonexistent, then the Council dismisses the claim for indemnification arisen by the value loss due to a change of the zoning status .

As it can be observed from the State Council judgments; the construction works may not be performed as it was provided by the construction agreement, due to the changes zoning status. However, who shall be liable to indemnify for the losses arising due to this change?

In this case, it is evident that, the conditions influencing both the conractor’s and the client’s willpowers to conclude the agreement change significantly. Because, with a probable ground plan change, the final building forming the subject of the agreement between the parties may not be accomplished, or can only be built being subject to significant limitations and restrictions. At such an event, although no action impossibility in terms of Article 117 of Obligations Code is present, it may be evident that, if the changed conditions were present before the conclusion of the contract, then they wouldn’t have executed the affected construction agreement. Then, they cannot be forced to be bound by the agreement. On the other hand, considering the Pacta Sund Servanda (treaties are binding) Principle which is one of the basic principles of the Obligations Law, then there may be a conflict between loyality to the agreement and the fairness of the agreement. This conflict is legally overcame by the “Clausula Rebus Sic Stantibus – Unexpected Conditions Clause and Adjustment of the Agreement to the Changed Conditions” principle, which is arisen from the Integrity Rule . In this case, any of the parties can claim adjustment of the agreement to the changed conditions. The principle of adjusting the agreement to the changed conditions is accepted by the legal doctrune and the Turkish Supreme Court acts positively to the adjustment claims, which may be considered as a must because of the contemporary legal practice .

As a result of the adjustment, the Turkish Supreme Court alters the sharing ratios of the parties at the residuary or incomplete building .

OGUZMAN/OZ”, “Borçlar Hukuku Genel Hükümler”, Istanbul,1995, s.306-309
“… when the case at hand has to be considered through the rules of “liability arising from contractual negotiations” (CULPA IN CONTRAHENDO) there cannot be any suspicions or hesitations. Actually, an agreement is a process. Before the execution of an agreement, the parties negotiate on the contents, terms, conditions and obligations included in the contract and these negotiations can either take long or short. With the start of the negotiations, a legal relationship is formed between the parties. This relationship is an agreement-wise confidence relationship. The confidence relationship is based on the integrity rule provided by the Article 2/1 of the Civil Code. Accordingly, the negotiatiors should clarify each other for the contents and conditions of the agreement during the negotiations, act through the integrity rule, act diligently not to harm each other’s personality or property and follow the protection obligations. In case the negotiations act negligently against these obligations and breach the confidence relationship established between them, then they are liable to indemnify for the arising losses.” Turkish Supreme Court 13th Civil Chamber E. 1995/9375 K. 1995/9860 T. 13.11.1995
“Nevertheless, at the petition, the claim is based on the nonperformance of the agreement as well as pre-agreement liability, arising from the confidence for the execution and performance. Such liability named as “culpa in contrahendo” by the doctrine can certainly be taken as a base for the indemnification claim. The first instance court’s decision given without putting any stress to these points is found to be incorrect.” Turkish Supreme Court 19th Civil Chamber E. 2005/1932 K. 2005/479 T. 28.4.2005
“OZ, Turgut”, “İş Sahibinin Eser Sözleşmesinden Dönmesi”, Istanbul, 1989, s.164
“OGUZMAN/OZ”, “Borçlar Hukuku Genel Hükümler”, Istanbul,1995, s.74-75
“Then, the issue which has to be searched primarily is whether the property can be transformed to be appropriate for construction suitable for the purpose provided by the agreement. If an absolute impossibility is determined for this issue, then, since the construction regulations being of the public order, the issue should be directly taken into consideration by the court and upon Article 20 of the OC, the case should be denied due to the invalidity of the agreement.” Turkish Supreme Court 15th Civil Chamber E. 1997/1995 K. 1997/2319 T. 1.5.1997
“It is noticed that, at the execution date of the legal deed, the performance of the agreement is impossible, because of the real estate’s status as well as some of the shareholders’ non-participation to the contract (OC Art. 20).” Turkish Supreme Court 15th Civil Chamber E. 1999/1573 K. 1999/3113 T. 13.9.1999
“… It is obvious that, in this context, the subject of the agreement is impossible and this impossibility is objective, being the case before conclusion of the agreement. In this case, instead of deciding to deny the case upon invalidity of the agreement provided by Art. 20/1 of OC, accepting the claim with the written justification is considered to be unfair and the court’s decision has to be reversed.” Turkish Supreme Court 15th Civil Chamber E. 2001/2101 K. 2001/4508 T. 11.10.2001
“… impossibility is one of the reasons putting an end to the debt. If it is found out that the performance impossibility was present before the conclusion of the contract (for example, nationalization of the real estate, allocation for green area or public services, etc.) then the action being the subject of the agreement happens to be impossible for everybody and the agreement is absolutely invalid. (OC Art. 20 ). At such events, the agreement shall be assubed to be invalid and no claims can be put forward based on an invalid agreement.” Turkish Supreme Court 15th Civil Chamber E. 2003/6203 K. 2004/3318 T. 14.6.2004
“… If the performance impossibility is present before the execution of the agreement and this fact arises the same result for everybody, then the agreement is invalid. … An informal construction agreement in return for appartment flats was signed with the the defendant contractor and the title deed registers were assigned to the defendant by the previous contractor. However, the required license for the construction could not be obtained. Regarding the plot belonging to the plaintiffs, there has been an objective impossibility which was present at the conclusion phase of the agreement. In the scope of missed opportunities, the reliance interest cannot be claimed.However, if the parties perform their own contractual obligations in spite of the invalid agreement, they should be returned upon the principles of unjust enrichment.” Turkish Supreme Court 15th Civil Chamber E. 2005/1974 K. 2006/2012 T. 5.4.2006
“OZ, Turgut”, “İş Sahibinin Eser Sözleşmesinden Dönmesi”, Istanbul, 1989, s.165
“At the service agreements which are in the context of reciprocal agreements, about the legal consequences of the default of the debtor (contractor) who does not complete the works with his own fault at the delivery date, there aren’t any special provisions provided by the Obligations Code. At the general provisions (Article 106-108) the debtor’s default at reciprocal agreements are provided. Therefore, there aren’t any lacuna and as it is stated by the Civil Law General Board’s decree, the legal provisions to be applied for the cases which are subject to the unification of the case law are the 106th to 108th articles of Obligations Law.” Turkish Supreme Court General Board of Case Law Unification E. 1983/3 K. 1984/1 T. 25.1.1984
“… Between the plaintiffs and the defendant Ugur T., a construction agreement in return for appartment flats have been executed on 2.7.1993 … The contractors are in default, by failing to fulfill their obligations to the landowners, although the construction period determined by the agreement has come to an end. In this case, the landowners have right to terminate the agreement, upon Article 106 of the OC.” Turkish Supreme Court 15th Civil Chamber E. 2005/534 K. 2005/1536 T. 16.3.2005
“… The construction agreement in return for the appartment flats are a kind of the service agreements, which charge rights and obligations for both parties. … At an agreement including reciprocal obligations, when one of the parties happen to be in default, the provisions provided by the Article 106 of the Obligations Code grant three optional rights to the opposite party. The non-default party of the agreement can either claim anytime for the performance of the agreement and indemnification of the losses arising due to the delay or by immediately declaring his denouncement from the performanece of the agreement and the indemnification claim for the losses arising due to the delay and therefore claim for indemnification of his losses arising from the nonperformance and the default or simply terminate the agreement.” Turkish Supreme Court 15th Civil Chamber E. 2005/533 K. 2005/5448 T. 14.10.2005
” OGUZMAN/OZ”, “Borçlar Hukuku Genel Hükümler”, Istanbul,1995, s.290-295
“OZ, Turgut”, “İnşaat Sözleşmesi ve İlgili Mevzuat”, Istanbul,2006, s.160-161
“OZ, Turgut”, “İş Sahibinin Eser Sözleşmesinden Dönmesi”, Istanbul, 1989, s.154-155
“… it has been clarified that, the absolute impossibility has been the case after the execution of the agreement. In this case, it is understood that, the performance of the agreement has become impossible other than the reasons depending on the willpowers of the landowners and the defendant contractor, the other landowners opposition to the termination of the agreement, who do not participate the present action, does not affect the final result. In this case, the duty of the court is only deciding for the termination of the agreement, upon Article 117 of OC.” Turkish Supreme Court 15th Civil Chamber E. 1997/4191 K. 1997/5347 T. 12.12.1997
“… it is understood that, the defendant sold a villa located at a housing complex to the plaintiff, to the section of the housing complex which was registered in name of the defendant some social facilities were built, but because of a dispute between the defendant and the municipality, the social facilities were decided to be deconstructed, due to their location within the green zone and the deconstruction has not taken place yet. The defendant has fulfilled his action undertaken by the agreement. The claim based on the deconstruction decision for the social facilities due to a legal status which occurred afterwards and in case of a future deconstruction, the probable value loss of the plaintiff’s villa cannot be accepted, because the defendant has fulfilled his own obligation and the dispute arises from performance impossibility without debtor’s fault, provided by the Article 117.” Turkish Supreme Court 13th Civil Chamber E. 2002/4251 K. 2002/6600 T. 4.6.2002
“… Since it is evident that, after the conclusion of the agreement between the parties, the zoning status has changed and it is understood that any building cannot be constructed in terms and conditions determined by the agreement, the agreement should be assumed to be terminated upon the Article 117 of OC, so the appeal claims are found to be inappropriate.” Turkish Supreme Court 15th Civil Chamber E. 2004/1009 K. 2004/5441 T. 27.10.2004
” OGUZMAN/OZ”, “Borçlar Hukuku Genel Hükümler”, Istanbul,1995,s.424, “Tekinay/Akman/Altop, s.1011, “DURAL”, “Borçlunun Sorumlu Olmadığı Sonraki İmkânsızlık”, s.114
“… Since the parties do not dispute on the impossibility of the performance of the agreement due to the impossibility of unification transactions for 1st and 37th plots which were determined to be the construction locations, and this issue has been also determined by the expert report (Art. 117, OC). Therefore, the parties can claim whatever they had given to the opposite party, upon the principles of unjust enrichment. Here, the points to be claimed are the surplus values created at the assets of the opposite party. At the action with No: 96/1 of Kartal First Instance Court, the plaintiff contractors claimed that, they paid amounts in DM to the landowner, they worked for unification of the plots as well construction plans and in the meantime, they had the project drawn. The plaintiffs cannot claim profit loss from the defendant landowner, put they can claim the monetary payments to the landowner which has to be returned and the values added to the asset of the defendant, in proportion to the land share. So, the court has to have the plaintiff explain the amount paid to the defendant and the values added to the assets of the defendant has to be found out with the expert examination and a decree for the total amount has to be given.” Turkish Supreme Court 15th Civil Chamber E. 1997/1139 K. 1997/2483 T. 12.5.1997
“SANCAKDAR, Oğuz”, “Belediyenin İmar Plânını Yapması-Değiştirmesi ve İptal Davası”, Ankara, 1996, s.154-155
Turkish State Council 6th Chamber E.81/1983 K.83/939 T.3/3/1983 Turkish State Council 6th Chamber E.79/1943 K.84/1468 T.29/3/1984
“… As for the case, the 3rd storey which was decided to be deconstructed had ben built by the plaintiff according to the construction license and housing license had been obtained afterwards, so it is evident without any doubt that, the plaintiffs losess arising from the building which was decided to be deconstructed has to be indemnified. In determination of the actual losses of the plaintiff due to the administration’s service fault, the calculation has to be made over the unit prices of the date when the losses were realized.” Turkish State Council 6th Chamber E. 2002/5832 K. 2003/3421 T. 2.6.2
“… As for the vested rights claimed by the plaintiffs, considering the settled case law by the Turkish State Council, in determination of the vested rights, the preparation of the building license certificate is not sufficient, but the level of the building constructed depending on the license certificate is taken as a measure. At the event, if the building started at the period when the mentioned license was valid and the level reached till the cancellation decree of the Constitution Court is proven, the assessment of the built sections as vested rights has to be determined by the court at the action for the deconstruction of the building.” Turkish State Council 6th Chamber E. 1991/482 K. 1991/3229 T. 24.12.1991
“… The plaintiff has applied to the defendant administration for the building he wished to construct on his property located at the residential area of the gronud plan, has obtained construction license on 31.12.1992, by completion of the building in accordance with the license, he obtained the housing license certificate on 22.9.1994. As for these transactions, the plaintiff does not have any misconduct, artifice or any fault attributable to the himsef and the mentioned building was constructed in accordance with the ground plan which was valid during whole period. The plaintiff who obtained the housing license certificate for the building now has vested rights. In this case, the cancellation of the construction license and the housing license after the completition of the building, due to the court’s cancellation of the ground plan’s change on 17.5.1995 does not have any legality.” Turkish State Council 6th Chamber E. 1997/6294 K. 1998/5931 T. 3.12.1998
“… At the event, the construction license dated 24.10.1995 was set in accordance with the ground plan which was valid then, and the construction works started based on the license, with the cancellation of the mentioned plan on 22.5.1997 by the Administrative Court, the construction site was not locked up with a seal and its proceeding was permitted. As for 26.11.1998, when the court’s decree for the cancellation was endorsed, no operations were carried and the construction license was cancelled almost two years after the validation of the new ground plan. In this case, execution of a deed only on 25.2.2000 for the fulfillment of the court’s decree dated 22.5.1997 and asking for making an alteration project due to the cancellation of the construction license, the completed sections of the building which were constructed between the in-between period has to be protected and accordingly, a new decision has to be given by the administrative court taking this fact into consideration”. Turkish State Council 6th Chamber E. 2003/6430 K. 2004/948 T. 20.2.2004
“… While the construction works were still proceeding, the administrative court had decided to cancel the ground plan which enabled increasing the storeys at the location, despite the defendant administration had to cancel the construction works when the cancellation of the ground plan was decided by the court, only on 5.7.2001, the construction site was locked up. Preparation of a construction license for the plaintiff’s building cannot be assumed to be sufficient for creation of vested rights by itself, but since the construction Works proceededed to the administrative court’s decree date without any fault or misconduct attributable to the plaintiff, the construction license of the plaintiff had to be cancelled by the defendant administration and the construction site had to be locked up just after the decree and the actual condition of the building at that time had to be assumed as a vested right. In the case at hand, the administrative court’s decree for the cancellation of the change of ground plan was given on 10.11.1998 and the plaintiff obtained his housing license on 20.3.1999. the defendant administration cancelled the construction license with a deed dated 20.4.2001, after the completion of the mentioned building, and the housing license was cancelled with a deed dated 17.7.2001 and the construction site lock up minutes were kept on 5.7.2001 and the building was subject to a lock up, it should be definitely accepted that, at the date of the deconstruction decision, the plaintiff had vested rights. In this case, the deed about the deconstruction of the building after its completion, by cancelling its construction license because of the cancellation of the ground plan change enabling storey increases at the building’s area of location with the court decree dated 10.11.1998 is legally inaccurate.” Turkish State Council 6th Chamber E. 2002/607 K. 2004/344 T. 2.6.2004
“… In case the ground plan enabling the construction in a several location is cancelled by the court, then if the construction works proceed without any artifice, fault or misconduct attributable to the related party, in accordance with the construction license, the administration has to lock up the construction site following the court’s decision and the building’s completed part up to this period has to be protected because of the presence of vested rights.” Turkish State Council 6th Chamber E. 2003/6692 K. 2005/3650 T. 17.6.2005
“… The claim for the indemnification for the expenditures made because of the project which was arranged in accordance with the zoning status before the change of the ground plans has to be dismissed, considering the construction license was not obtained before the change of plans and the previous zoning status is now invalid, without any fault attributable to the municipality …” Turkish State Council 6th Chamber E.83/1277 K.84/3059 T.19.11.1984
“… The loss arising from levering the road passing in front of the buildin, by connecting it to the roadway crosspoint and consequently, the entrance floor and two shops at the front side of the building which were previously at the same level with the road becoming lower than the road’s ground has to be indemnified …” Turkish State Council 6th Chamber E.86/296 K.86/553 T.28.5.1986
“Av. Celal Ülgen”, “Dövizle Borcu Olanlar İçin UYARLAMA DAVALARI”, Istanbul, 2001
“… The principle of being bound with the agreement (Pacta Sund Servanda) has been accepted by our legal system. According to this principle, the agreement has to be applied in accordance with the terms and conditions present at its execution date. Even if the conditions of the agreement has become harder for the debtor to abide and the determined balance of obligations has changed because of the further events, the debtor has to fulfill its contractual obligation. Actually, the principle of being bound with the agreement forms the basic principle of contractual law, as a requirement of the rule of legal security, fidelity and fairness. However, this principle is restricted with other principles of civil law. The balance present at the execution date of the agreement between the reciprocal obligations may have changed to the great disadvantage of any of the parties afterwards. In this case, a conflict arises between the boundness to the agreement and contractual fairness principles and now, being firmly bound with the pacta sund servanda principle creates a situation violating the fairness, equity and objective goodwill rules (CC Art 4/2). In legal point of view, this conflict is overcome by the principle of clausula rebus sic stantibus (adjustment of the agreement to the changed conditions).” Turkish Supreme Court 13th Civil Chamber E. 1998/5829 K. 1998/7843 T. 15.10.1998
“… According to the pacta sund servanda principle, the agreement should apply completely from the moment they are executed and their provisions should be binding. The “treaties are binding” rule is one of the basic principles of contractual law, as a requirement of legal security, fidelity and fairness. At the agreements including reciprocal obligations, the balance between the obligations may be destroyed by extraordinary changes of the economical conditions, to the disadvantage of any of the parties, causing an unbearable burden; so, for such events as war, economical crises shaking the whole country, extraordinary upward shifts of the inflation graphics, sudden devaluations, significant decreases of the monetary values, a conflict arises between the principles of pacta sund servanda principle and fairness of the agreement and now being bound firmly by the agreement creates an infairness, against the principles of justice, equity and objective goodwill. To overcome such consequences, today the common fundamental of the Swiss-Turkish Law is finding a solution upon the fairness rule, so the balance between the obligations being overwhelmed by the extraordinary changes, performance’s becoming difficult, even becoming impossible, then the “deconstruction of the transaction’s base” is the case. For such cases, making changes at an agreement which was executed in the framework of improvisation or clausula rebus sic stantibus notions and judge’s intervention to the agreement can be claimed. The doctrine and the legal practice has adobted the contractual adjustment…” Turkish Supreme Court Board of Civil Chambers E. 2001/15-402 K. 2001/459 T. 30.5.2001
“… At the construction agreements in return for appartment flats, the condominiums which are of seperate shares of the parties are already determined, in other words, the land shares of the parties are already known, so the amount of these agreements are in lump sum. Upon Article 365/2 of OC, the conditions which cannot be foreseen or foreseen but neglected happen to obstruct the performance of the works or make it significantly harder to accomplish, then the judge utilizes his judicial discretion and either increases the share of the contractor determined by the contract (as for the case at hand, landshare) or decides to terminate the contract. As for the case at hand, whether the performance of the works has invisibly harder or not, taking the Provincial Bank’s report into consideration and in case such a fact is present, then the action should be considered to be a legal adjustment claim upon Article 365 of OC, for increasing the contractor’s landshare amount and a negative or positive decree has to be given consequently, so the case’s dismissal with the written justifications is considered to be inaccurate” Turkish Supreme Court Board of Civil Chambers E. 2003/15-125 K. 2003/141 T. 5.3.2003