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EFFECT OF COVID-19 ON COMMERCIAL CONTRACTS

One of the areas that are affected by the Covid-19 outbreak which is described as “pandemic” by the World Health Organization, emerged in Wuhan, China, was the subject of trade relations and related contractual relations. It has been examined in our articles on “Contract/Pacta Sunt Servanda in Turkish Law”, “Unexpected Event, Force Majeure, Pandemic and Their Effects on Contracts” and “Lawsuit Cases of Adaptation” in which the obligations of the parties to fulfill the obligations they have undertaken with the contract as agreed in the contract. This review will be for the effect of Covid-19 on commercial contracts.

            The issue that needs to be pointed our primarily that; it is possible to bring a legal interpretation to the situation by comparing the judicial decisions regarding the epidemic, since Covid-19 has no judicial decision yet, in which the effects of the commercial relations can be seen and this epidemic can be regarded as a force majeure in terms of commercial contracts. However, evaluating all the provisions of the contract together, examining whether the epidemic will constitute a force majeure, interpreting the contract according to its purpose and subject and in our article titled “Unexpected Event, Force Majeure, Pandemic and Their Effects on Contracts”, determining whether or not it satisfies the conditions referred to in our article will provide a healthy examination.

The contracts between traders are called commercial contracts. For this contract, it is not required for both parties to be the traders, and the contracts that are commercial business for only one of the parties are considered commercial business for the other unless there is a provision contrary to the Law. As an example of this issue can be stated as one of the parties in public procurement contracts is a public administration, we can show that this contract is a commercial contract because the other is a trader; otherwise, we can state contrarily that where one of the parties is a trader and the other is a consumer is not a commercial contract.

In case of acceptance of Covid-19 as force majeure, the provisions of the contract should be examined primarily in order to be able to mention its effects on commercial contracts. For example; the parties may have determined which situations will be accepted as force majeure in the contract and the current situation will be evaluated according to the concrete contract. If there is a provision in the contract that epidemic diseases will not be considered as a force majeure, then Covid-19 will not be accepted as a force majeure in that contract. The most important situation to be considered here is that the necessity of such provision for both parties. Otherwise, this provision of the contract will be considered as a general transaction condition and that term of the contract will be considered invalid.

If there is not any provision for the force majeure in the contract; the reflection of Covid-19 in the contracts may be as follows;

a.Impossibility of performance in some cases (Turkish Code of Obligations Art. 136, 137)

  • Impossibility should not be caused from the debtor’s own fault.
  • The impossibility must have been caused by a number of external events.
  • It should not be possible to eliminate the impossibility due to external events.
  • The creditor must be notified without delay as soon as the impossibility arises.

b. Temporary impossibility of performance in some cases

c. In some cases the performance may be difficult to perform: Hardship (Turkish Code of Obligations Art. 138)

  • An extraordinary situation not foreseen or not anticipated by the parties at the time of the contract
  • The extraordinary situation is not caused by the parties
  • The fact that the extraordinary situation causes a miscarriage in a way that the debtor cannot claim his performance in violation of the integrity rule
  • The rights arising from the undue or undue hardship of the debt have been exercised by reserving
  • Right to return in sudden actions; right to termination in continuous actions.

The states listed above are detailed in our article titled “Contract / Pacta Sunt Servanda in Turkish Law”.

The commercial sales are regulated by special provisions under the article 23 of the Turkish Commercial Code. General provisions of the Turkish Code of Obligations will be applied for cases other than these special provisions. Upon the commercial sale, the buyer must check the purchased product and he must notify it within the period specified in the law if there is a defect on the product. The buyer has an obligation to report the defect in 2 days if there is a clear defect. If the defect is not clear, due to the obligation to be prudent merchant, there is an obligation to report it in case of inspection and defect within 8 days. The defect notification period is stated in the decision of the General Assembly of the Supreme Court dated 25.5.2016 and numbered 2014/19-861 2016/632 as follows: “The case is about the request for the collection of loss resulting from the sale of defective goods. According to 6762 S.K., which was in effect on the date of incident, in the commercial sales, the defect must be reported within 2 days for clear defects and within 8 days for the defects that are not obvious. The person who claims that the defect has been made must prove that it has been done as prescribed by law..”. Since the Law on the Amendment of Certain Laws No. 7226 and additionally with the Decision of the President No. 2480, the legal terms are stopped between the dates 13.03.2020 – 15.06.2020 (including this date), the duration of 2 and 8 day notice mentioned here are also considered to be stopped between the dates specified. Again, in the relations of traders, the acceptance of the content of the invoice if it is not objected in 8 days is also considered as stopped in accordance with the code.

There are also two opinions in the doctrine about whether the provisions on the extension of periods remaining 15 days or less to the end date will be applied for periods of 2 and 8 days: One opinion states that this provision will apply to those who normally have more than 15 days; the other opinion states that if there is a duration less than 15 days in normal situation, then it will not be longer 15 days more.

The issue of the not submitting the check to the bank in the legal period which is used as a means of payment in the transactions between the merchants, is accepted within the scope of the downtime imposed by Law No. 7226. The disagreements on this matter are gathered at the point of whether it is possible to present during this time or not. One opinion states that checks will not be submitted within this period. The other opinion states that if the holder can submit the check within the time of the check, the payment must be made by the bank, as the arrangement is brought to prevent loss of rights. The differences of the opinions that are arised due to Covid-19 will be resolved by the decisions made in future upon the conflicts and will set an example for other situations.


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