Circumstances that Terminate Debt

1. Performance of the Debt

It is the fulfillment of an obligation. When the debtor fulfills their obligation, the creditor is satisfied and the debt relationship between them is terminated. It is important that the performance is carried out as requested. That is, the debtor must perform what they have undertaken, at the agreed time and place.

• "...since the portion of the immovable property that was the subject of the lease agreement and for which the defendant cooperative had undertaken to take the necessary steps for its future registration in the name of the tenant free of charge, became public property by being relinquished as a road, the performance of the obligation is impossible." (Supreme Court 14th Civil Chamber, 18.02.2008, 2008/520 E, 2008/1833 K.)

2. Impossibility of Performance

A debt is also extinguished if, after the debt relationship has been established, its performance becomes impossible. This impossibility may arise from a natural event or a person's fault. Furthermore, a material cause or a legal principle may have rendered it impossible.

For example, the expropriation of land promised for sale or the death of an animal that was sold would result in impossibility of performance.

According to Article 36 of the Turkish Code of Obligations, if the debtor is not at fault when performance becomes impossible, the obligation is extinguished and no claim can be made against the debtor. However, the debtor must immediately inform the creditor of the impossibility of performance and take necessary measures to prevent further damage. If the debtor fails to fulfill these obligations, they must compensate for the resulting damages. If the impossibility of performance arises due to the debtor's fault, the creditor can claim compensation for the resulting damages from the debtor. To illustrate with the example of a sold animal dying, if the debtor took all necessary precautions for the animal's care and health but the animal died, the debtor is not at fault, and the creditor cannot demand compensation for the damages. However, if the debtor failed to provide the necessary care and checks for the animal, and the animal died as a result of this negligence, the creditor can demand compensation for the damages due to the debtor's fault.

• "...If this impossibility arose due to the fault of the employer, the contractor may also request compensation for the damages. According to Article 371, if the contractor dies or becomes incapable of completing the work without fault, the contract for work, which was made taking the contractor into consideration, terminates. However, in this case, if the completed part can be used, the employer is obliged to accept it and pay for it. These articles stipulate the employer's responsibility for the completed part in the cases of impossibility of performance. This responsibility is regulated in Article 370 as payment for the value of the completed part of the work, and in Article 371 as payment for the cost of the work done and beneficial to the employer..." (Supreme Court 15th Civil Chamber, January 30, 2017, Case No. 2016/1159 E, Decision No. 2017/350 K.)

 

 

 

 

3. Absolution

A release from debt is an agreement between a creditor and a debtor to relieve the debtor of the obligation without performance of the debt. The creditor waives their claim, and this is done through a contract. Unless otherwise agreed, a release covers the entire debt. In a partial release, the debt is extinguished only for the agreed portion.

• "A release agreement cannot be given value if it does not contain a date and it cannot be clearly understood from its content that it was drawn up after the termination date."(Supreme Court of Appeals, 9th Civil Chamber, 5.11.2010, Case No. 2008/37441 E, Decision No. 2010/31943 K.)
• "...waiver agreements concluded while the employment relationship continues are invalid. During this period, the employee is completely dependent on the employer, and despite the provisions on job security, it is possible for the employee to be compelled to sign a waiver agreement against their will in order to ensure the continuation of the employment relationship or to receive some of their labor claims as soon as possible..." (Supreme Court 9th Civil Chamber, October 15, 2010, Case No. 2008/41165 E, Decision No. 2010/29240 K.)

 

4. Renewal (Renovation)

It is the termination of a previous debt by creating a new one. This can be done by changing the subject matter of the debt, the rules it is subject to, its cause, or the parties involved.

Renewal occurs with the explicit consent of the parties. Otherwise, it is assumed that the parties intend to make a change without terminating the debt. This is because not every renewal in a debt relationship terminates the debt. It is essential that both parties intend to terminate the debt with the said change and base this on their explicit consent. With the renewal, the rights attached to the previous debt (penalty clause, pledge, guarantee) also terminate. Even if the old claim was subject to a different statute of limitations, the new claim becomes subject to a ten-year statute of limitations.

5. Exchange

Set-off terminates a portion of the parties' mutual debts of the same type. It arises from the declaration of one party, and from the moment the right of set-off is established, the debts of both parties are extinguished. A party whose claim is not yet due cannot request set-off. Set-off can take place in court or out of court.

• "...The receivables to be offset must be of the same nature and type. Debts may be of the same type at the time they arise, or they may become of the same type later. However, at the time the right of offset is exercised, they must necessarily be of the same type..." (Supreme Court of Appeals, 7th Civil Chamber, 05.2016, Case No. 2016/16409 E, Decision No. 2016/11622 K.)

 

6. Statute of Limitations

There are two conditions for a statute of limitations to apply. Firstly, the claim must be time-barred. According to the Turkish Code of Obligations, unless otherwise stipulated in the law, every claim is subject to a 10-year statute of limitations. Secondly, this statute of limitations must have expired. Again, according to the aforementioned law, the statute of limitations for claims is 10 years, but if a shorter or longer period is specifically defined, that period applies. For example, according to Article 147 of the Turkish Code of Obligations, claims such as rent payments, principal interest, claims arising from agency/commission/agency agreements, and accommodation fees at hotels/motels/guesthouses/holiday resorts are subject to a 5-year statute of limitations.

 

• If the act causing the damage also constitutes a crime under the penal code, and the statute of limitations prescribed by the penal code for that act is longer, then the applicable statute of limitations is the criminal statute of limitations applicable to that crime. The starting point of the criminal statute of limitations is the date the harmful act occurred.  (Supreme Court of Appeals, 13th Civil Chamber, March 26, 2019, Case No. 2014/941 E, Decision No. 2014/2876 K.)

 

7. Merger of Debtor and Creditor Status

If the creditor and debtor become the same person, the debt is extinguished. This inheritance can occur when married couples adopt a community property regime or when a transfer of ownership takes place. Upon its occurrence, rights such as guarantees and pledges attached to the original debt also cease. According to the law, special provisions regarding real estate pledges and negotiable instruments are reserved.

• "...this termination is absolute unless the merger becomes null and void; the transfer of the terminated debt to another party (assignment of the claim to another party) is no longer possible." (Supreme Court of Appeals, 17th Civil Chamber, 07.03.2013, Case No. 2012/13313 E, Decision No. 2013/3070 K.)