The effects of the Covid-19 pandemic, which emerged in Wuhan city of China and which was declared as “pandemic” by the World Health Organization on many contractual relationships have been examined in our previous articles. In this article, “the effect of pandemic on contract for work” will be examined.
Adaptation provision related to the contract for work is regulated with the Article 480 of Turkish Code of Obligations. The Article 480 of Turkish Code of Obligations is a special adaptation clause in terms of contract for work and it is a provision that regulates the increase of fee or termination of the contract due to unforeseen situations in contracts with lump sum price.
Contract for work with lump sum price
a. Lump sum price
ARTICLE 480 – If the price is decided as lump sum price, the contractor is obliged to do the work with that price. Even the work has required much more effort and expense than what was foreseen; the contractor cannot request to increase the price determined.
However, if unforeseeable or foreseeable but unconsidered circumstances prevent or make it hard to perform the work with previously decided lump sum price, the contractor has the right to request adaptation of the contract according to the new circumstances from judge; if this is nonetheless not possible or cannot be expected from the counter party, the contractor has the right to terminate the contract. In case it is required in accordance with honesty principle, the contractor may only exercise his right to terminate.
Even the work done required less effort and expenses than which was foreseen, the customer is obliged to pay the total price agreed upon before.
Article 480 of the Turkish Code of Obligations is a special provision that regulates the adaptation of contract or the termination of the contract, in case the contractor has excessive-performance difficulties which cannot be foreseen or foreseen but is not considered by the parties. If the excessive difficulty of performance in the contract for work occurred due to a reason other than the increase in costs, an adaptation may be requested based on Article 138 of the Turkish Code of Obligations, which is a general provision, instead of Article 480 of the Turkish Code of Obligations.
For example; In case the customer have given this work by making a contract with the lump sum price with the contractor for a work that can be made with a commodity that can only be obtained from a country and abroad and if the delivery period is assumed to be 1 year; in case the country producing the raw material prohibits these to be sold abroad, there is a certain impossibility to perform. Another possibility is that the raw material can be brought from abroad, but payment would be made in exchange for foreign currency. In this case, adaptation can be requested. According to the judicial decisions, fluctuations in foreign exchange rate are not sufficient reasons for adaptation on their own.
As a result; the Covid-19 pandemic may also affect contracts for work between private law entities. At the stage of establishing contracts, contractual debts may not be able to be fulfilled at the determined or foreseen price and time because of such an extraordinary situation that is unpredictable and in this case the contract may need to be adapted by the judge. In some cases, it will not be possible to keep the contract alive even with adaptation and the rescission of the contract or termination of the contract may come to the agenda if the relevant conditions meet. As a result of the evaluation of each contract within the framework of its own terms and conditions; it should be determined that whether adaptation or rescission of the contract or termination of the contract is necessary or not.
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