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UNEXPECTED EVENT, FORCE MAJEURE, PANDEMIC AND THEIR EFFECTS ON CONTRACTS

The issues such as force majeure, excessive difficulty of performance, impossibility of performance and adaptation cases have frequently started to appear on the agenda as a result of the problems occurring in the contracts between the parties due to the effects of COVID-19 on commercial life, which has recently affected the whole world, COVID-19 is an epidemic disease registered as “pandemic” worldwide and epidemic diseases are considered as a force majeure in accordance with the decisions of the Supreme Court of Appeals, conflicts based on unexpected event, force majeure, impossibility of performance and excessive difficulty of performance will be among the issues which we will try to resolve in the new normal life have been examined in our article titled “Contract and Pacta Sunt Servanda in Turkish Law”. The concepts of unexpected event, force majeure and pandemic and their effects on contracts will be briefly examined in this article.

WHAT IS FORCE MAJEURE?

Force majeure can be defined as the reasons that arise as a result of external factors, independent from the parties of a contract, unforeseen and unpredictable at the time the contract is established, cannot be resisted and make the performance of the debt impossible.

Force majeure, by definition, refers to the circumstances and reasons that make the violation of debt inevitable. Here, it is inevitable that the debtor violates his debt without any influence. Moreover, the force majeure is an absolute cause of impossibility. The occurrence of force majeure has the effect of a third resource other than the parties, not the parties. Neither the power of the debtor nor the debtee is enough to overcome the situation arising from force majeure[1]. Impossibility is one of the reasons that end the debt. The impossibility of performance of the debt may be caused by force majeure, in other words, an inevitable reason. In general, the existence of a force majeure which is defined in the doctrine as an event that is the result of the external sources, is not related to the business of the debtor, cannot be seen before, inevitably and absolutely prevents the performance of the debt is among the reasons that eliminate the debt in terms of the debtor[2].

WHAT IS UNEXPECTED EVENT?

The unexpected event, which has been defined in the concept of “excessive difficulty of performance”, which is among the exceptions of the pacta sunt servanda principle we have examined before, can be defined briefly as; situation which is not foreseen by the parties at the time of the contract and which is not expected to be anticipated, arises from a reason not due to the debtor and changes the existing facts at the time only against the debtor in such a way as to violate the rules of honesty.

In other words, if the conditions that caused the parties to make the contract and unite their will in that direction at the time of the contract changed significantly later, the parties can no longer be bound by that contract. This estimation is called “clausula rebus sic stantibus-unexpected event and condition” or “theory of unpredictability” in the doctrine[3].

What is the difference between force majeure and unexpected event?

Force majeure causes more severe and absolute inevitability. The unexpected event has a more limited effect. The force majeure is an external, foreign situation, the unexpected event may also be an internal situation. Inevitability in force majeure is objective valid for everyone.

WHAT IS PANDEMIC?

Pandemic is the general name given to epidemics that spread over a wide area and show its effect, such as the surface of a continent or even the whole world. According to the WHO (World Health Organization) definition, a pandemic is considered to has started only when it meets the following 3 conditions: (i) The emergence of a disease which the population has not previously been exposed, (ii) The factor of the disease is transmitted to humans and causes a dangerous disease, (iii) The spread of the disease factor easily and continuously among people. In this context, COVID-19 is an epidemic disease recorded as “pandemic” with the explanation made by WHO worldwide.

EVALUATION IN TERMS OF THE CONTRACTS

After defining the terms of force majeure, unexpected event and pandemic, the effects of these concepts on contracts established under Turkish law will be evaluated briefly.

Evaluation of force majeure in terms of the fate of the contracts: As stated above, there is an impossibility of performance as a result of force majeure, and the impossibility of performance is one of the reasons that end the debt. In case of force majeure, provisions regarding the full / partial impossibility of performance will be applied depending on the situation (TCO art. 136, 137). In addition, even if it is not directly recognized in the legislation, there may be application of the concept of temporary impossibility, which was found in the jurisprudence of the Supreme Court of Appeals and doctrine and which we have examined in our previous articles. It is important to state that there is no impossibility of performance in terms of pecuniary debts.

If a case that meets the force majeure conditions emerges, it should first be checked whether the force majeure conditions are regulated in the contract.

If the contract includes provisions to be applied in case of force majeure, contract terms will be applied in accordance with the freedom of contract. The situation to be considered here is; it is necessary to put such a provision for both parties.

Together with the provisions of force majeure are regulated in the contract, the situations that will cause force majeure may also be listed one by one. If the case that emerges in this situtation is one of these situations, the terms of the contract will be applied. However, in practice, usually the situations for force majeure are not kept in a limited number and they are made in an open-ended way by using phrases such as “et cetera”. In any case, all provisions of the contract must be evaluated together and whether the epidemic will constitute a force majeure should be interpreted according to the purpose and subject of the contract.

In case the force majeure clause is not included in the contract, the termination of the contract may be possible according to the general principles (TCO art. 117 debtors’ default, TCO art. 136 impossibility of performance, TCO art. 138 difficulty of performance)[4].

Evaluation of unexpected event in terms of the fate of the contracts: As a result of an unexpected event emergence, there is excessive difficulty of performance. In case of an unexpected event, provisions regarding excessive difficulty of performance will be implemented and the contract may be requested to be adapted (TCO art. 138). If it is not possible to adapt the contract, the debtor can use the right to return from the contract in sudden performance contracts and termination in continuous performance contracts. You may find detailed information on this subject from our article on Lawsuit Cases of Adaptation.

The reflection of Covid-19 which has been accepted as a pandemic to the contracts can be as follows: (i) Impossibility of performance in some cases (TCO m. 136, 137), (ii) Temporary impossibility of performance in some cases (Supreme Court case law; doctrine opinions), (iii) Excessive difficulty of performance in some cases (TCO art. 138). However, one of these situations may not emerge in all cases because the pandemic may not constitute a force majeure or an unexpected event for each contract. Each concrete situation must be evaluated on its own and a conclusion must be made accordingly. For example, it will be a force majeure for workplaces covered by the prohibition of the Ministry of Internal Affairs; an unexpected event for those who are affected by the process and close down the workplace although they are not covered by the prohibition; it will not constitute a force majeure or an unexpected event for those who are not affected by the process.

Each relationship and type of contract, the purpose and spirit of the contract will need to be evaluated separately, together with concrete conditions, and the Covid-19 shoould be evaluated in this regard. For example, its effects and consequences on rental relationships and commercial loan relationships will certainly not be the same.

The effects of Covid-19 on commercial relations, rental, dealership, work, commercial loan and public procurement relations have been examined separately in the following articles and detailed information may be obtained from the related articles.


[1] T.R. Supreme Court of Appeals 14. Civil Chamber E. 2006/9323 K. 2006/12267 D. 1.11.2006

[2] T.R. Supreme Court of Appeals 11. Civil Chamber E. 2015/10768 K. 2016/4782 D. 28.4.2016

[3] T.R. Supreme Court of AppealsGeneral Assembly of Civil Chambers  E. 1978/11-773 K. 1980/2310 D. 17.10.1980

[4]Korona Virüs Salgınının Sözleşmelere Etkisi, İfa İmkânsızlığı, İfa Güçlüğü ve Uyarlama”, Att. Dr. R. Tamer Pekdinçer, Att. İrem Toprakkaya Babalık (https://blog.lexpera.com.tr/korona-virus-salgininin-sozlesmelere-etkisi-ifa-imkansizligi-ifa-guclugu-ve-uyarlama/)


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