CONTRACT ADAPTATION AND EXCESSIVE DIFFICULTY OF PERFORMANCE: LEGAL BASIS AND APPLICATION AREAS

Contract Adaptation and Extreme Difficulty in Performance:

Contract adaptation is the rearrangement of contract terms to prevent unfair outcomes arising from changes in circumstances that initially resulted in unfair outcomes for the parties. Adaptation allows the parties to adjust to the new conditions and is usually accomplished through a court order or mutual agreement between the parties.

Adaptation of the Contract

Contract adaptation due to extreme difficulty in performance means adjusting the existing contract terms to suit the new situation. Adaptation requests can generally take the following forms:

1. Modifying the Contract Terms:
   • If an agreement is reached between the parties, the contract terms will be modified to reflect the new situation. For example, payment schedules, delivery times, and the scope of work may be renegotiated.
2. Termination of the Contract:
   • If adaptation is not possible or the parties are unwilling to do so, the debtor may request termination of the contract. Termination is a last resort if the parties cannot reach an agreement on new terms.

Conditions that must be met in order for contracts to be adapted:

Unforeseen Circumstance: This refers to a situation that the parties could not foresee at the time of entering into the contract, or even if they could foresee it, they could not fully calculate its effects. This situation may arise due to reasons such as an economic crisis, natural disaster, or changes in laws.

Aggravating Circumstances: The situation must make it excessively difficult or impossible for one of the parties to perform their obligation. In such a case, performing the obligation in kind may lead to unfair results.

Request for Adaptation: The parties may request adaptation of the contract in light of these changing circumstances. If the parties cannot reach an agreement, they may resort to legal action.

Extreme Difficulty in Performance:

Excessive difficulty in performance occurs when, due to unforeseen events that happened after the conclusion of a contract and which the parties could not have foreseen or, even if foreseen, did not take into account at the time of the contract's conclusion, the performance of the obligation becomes excessively difficult for one of the parties. While this situation does not render performance impossible, it creates a significant economic or practical difficulty for one of the parties. Events must occur after the conclusion of the contract that excessively hinder or make performance impossible for the debtor. These events must be unforeseeable or, even if foreseen, unavoidable.

Objective impossibility: The debtor's ability to perform must be significantly impaired. Circumstances that seriously hinder the debtor's performance can be considered under this provision.

Immediate notification: When faced with such a situation, the debtor must immediately notify the creditor and seek solutions.

The debtor may request the court to adapt or terminate the contract due to excessive difficulty in performance. In this case, the court may renegotiate the terms of the contract, postpone performance, or terminate the contract.

Conditions Regarding Extreme Difficulty in Performance and Adaptation:

Article 138 of the Turkish Code of Obligations allows for the adaptation of a contract in cases of excessive difficulty in performance. For a contract to be adapted based on excessive difficulty in performance, the following conditions must be met:

1. The Contract Must Be of Continuous Nature:
   • Requests for contract adaptation usually arise in long-term contracts that create continuous obligations. Such requests are generally not accepted for short-term contracts.
2. The Occurrence of an Extraordinary Situation:
   • An extraordinary event occurring after the conclusion of the contract must have made it excessively difficult for one of the parties to fulfill its obligation. This extraordinary event must be unforeseen and unavoidable. For example, economic crises, natural disasters, and epidemics can be considered extraordinary events.
3. Changes to Contract Terms:
   • Due to an extraordinary circumstance, the terms of the contract must have changed drastically to the detriment of one of the parties. In this case, fulfilling the contract in its original form may lead to unfair results.
4. Absence of Fault on the Debtor's Part:
   • The debtor must not be at fault for the situation of extreme difficulty in performance. If the debtor foresaw this situation or caused it, they cannot request an adjustment.
5. Request:
   • The debtor may request the other party to adapt the contract to the new terms. If the other party does not accept this request, the debtor may apply to the court to have the contract adapted to the new situation.

Application Areas of Extreme Performance Difficulty

Extreme difficulty in performance and contract adaptation are frequently encountered, especially in contract types such as long-term lease agreements, employment contracts, and construction contracts. Economic crises, sudden changes in exchange rates, and global events like pandemics have led to these situations becoming more common in recent years.

The Role of the Court

When courts encounter requests for contract adaptation due to extreme difficulty in performance, they assess whether the contract can be adjusted to the new circumstances. To find an equitable solution, courts consider the parties' economic situations, the purpose of the contract, and the effects of the extraordinary circumstances.

Contract adaptation and excessive difficulty of performance are important legal tools for balancing the rights and obligations of contract parties. This tool was developed to prevent unexpected and extraordinary circumstances from placing an unfair burden on one party. In such cases, parties can seek solutions through negotiation or apply to the courts to have the contract adapted to the new situation.

Law Student Intern Nursena İbanoğlu