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Adaptation of Lease Agreements due to an Unexpected Situation

02 November, 2020

It is known that the Covid-19 Pandemic, which affects our lives in many ways, also affects different sectors. In this regard, legal affairs, transactions and relationships must also be evaluated. In this study, the issue of Adaptation of Lease Agreements due to an Unexpected Situation under the Conditions of the Covid-19 Pandemic will be discussed. 

 Lease Agreements are regulated under Articles 299 to 378 of the Turkish Code of Obligations ("TCO")The lease agreement is defined as follows in the TCO: These are contracts in which the lessor agrees to permit the tenant use of and benefit from it, and the lessee undertakes to pay the agreed rental price in return. The concept of adaptation is regulated under Article 138 of the TCO specifically for the collapse of the basis of the transaction, and it contains unique elements. Adaptation can be defined asAfter fulfilment the requirements of the formative right, re-negotiations were initiated and no results were obtained, the victim's use of their formative right. Although there are no specific adaptation provisions regarding lease agreements, in cases where adaptation conditions are met, the parties can refer to the provision of Article 138 of the TCO. 

 First of all, the conditions of the adaptation on the basis of Article 138 of the TCO should be examined in the light of the doctrine and the Court of Cassation decisions. In the doctrine, the following conditions are required for the collapse of the basis of the transaction and adaptation: a) A fundamental change in the conditions underlying the transaction after conclusion of a contract; b) This change not being foreseen by the parties; c) The unlikelihood of performance where, if there is a contractual or legal provision for risk distribution, according to these provisions, if not, according to the characteristics of the concrete event and fair risk distribution 

 According to the Court of Cassation’s case law, the conditions of the adaptation can be listed as follows; a) There is an occurrence of an extraordinary event that was not anticipated or could not have been anticipated when the contract was concluded b) This situation is not caused by the debtor  cThis situation has to have changed the existing facts at the time of conclusion of the contract against the debtor in such a way that requesting performance of the contract would contradict the good faith, and d) The debtor has to not have yet fulfilled its debt or performed it by reserving his rights arising from hardship 

 The aforementioned elements and criteria have been included in framework of doctrine and the Court of Cassation's case law and formed the general framework for adaptation. It should be noted that, Lease Agreementshould be examined in terms of the characteristics of the concrete event subject to the conditions under framework of doctrine and the Court of Cassation's case law. As a matter of fact, it is not possible to say that every contract regarding the lease relationship will be adapted due to the Covid-19 Pandemic. For this reason, characteristics of the concrete event are important in terms of adaptation. 

 As a result, the party that believes that the requirements of adaptation are met within the scope of the Lease agreement and under circumstances of the concrete events has the right to ask the judge to adapt the contract to new conditions or to avoid the contract if adaptation is not possible. 

 It should be noted that the Civil Courts of Peace have jurisdiction for adaptation cases in accordance with Article 4/1-a of the Turkish Civil Procedure Code. Finally, it is important to point out that the lawsuits related to the determination of the rental price and the adaptation of the rental price are different types of cases, and the party who wants adaptation should pay attention to this distinction.