The Sanction of a Contract Provision Being Deemed Unwritten in the Context of General Terms and Conditions
Introduction
The use of general terms and conditions is a commercial reality not only in consumer transactions but also in commercial transactions in certain industries such as automotive[1], banking, insurance, telecommunications and energy.[2] In fact, “general terms and conditions” have been around since the industrial revolution in the nineteenth century.[3]
Indeed, the reasonable use of general terms and conditions may serve to achieve efficiency, standardization and rationalization. Participants of the relevant sector may, through such terms, create a self-regulation mechanism. However, situations where users of such terms outright refuse to make any changes to them whatsoever for fear of distorting their operation are quite common. In such cases, attempts to negotiate such terms may easily become akin to the situation portrayed in the painting Duel with Cudgels,[4] as at least one of the parties is decidedly “dug-into” its position.
Acknowledging the fact that they may be abused by entities with stronger negotiating power, Turkish Code of Obligations numbered 6098 (“TCO”) contemplates a scrutiny mechanism for effectiveness of general terms and conditions. In case provisions contained in general terms and conditions fail to pass the effectiveness tests contemplated in the TCO, they are deemed as unwritten. However, the legal nature of being deemed unwritten is debatable. Popularity of general terms and conditions and unresolved debates surrounding what is meant by being deemed as unwritten demonstrates that this subject still warrants consideration.
Definition of General Terms and Conditions
The principle of freedom of contract is at the heart of the law of obligations. In this respect, a contract is a tool for regulating private law relationships between natural and legal persons.[5] The law does not interfere in this special area within which the parties have the right to make decisions regarding their rights and interests as long as such decisions do not extend to areas where parties are not given full autonomy. The general assumption behind this principle is that the parties are more or less equal, and they are able to protect their interest during contract negotiations.[6] That being said, however, the balance is tilted when a party with superior negotiating power uses general terms and conditions in its contractual dealings.[7]
According to TCO Art. 20, there are three main elements for identifying general terms and conditions. Firstly, they should be unilaterally prepared by one of the parties prior to the execution of the contract and submitted by to the counterparty at the time when the contract is to be executed. Secondly, the intention for preparing such terms must be to use them for subsequent contractual relationships of a similar nature.[8] Finally, the contract must be imposed by one of the parties. If any of the aforesaid elements is missing, the relevant provisions will not be regarded as general terms and conditions under Turkish law.[9] On the flip side, existence of these conditions will be sufficient for concluding that the relevant provisions are general terms and conditions.[10] Moreover, if the aforementioned conditions are fulfilled only for a part of the contract; the relevant part will be regarded as general terms and conditions irrespective of the fact that the other parts of the contract were negotiated between the parties.[11]
An important note here is that the TCO does not make a restriction as to whom the provisions relating to general terms and conditions may apply.[12] However, as merchants are under a general obligation to act prudently, Court of Cassation appears to be hesitant to apply TCO provisions on general terms and conditions for merchants.[13] Therefore, although it would not be accurate to say that the parties should not be merchants in order for TCO 20 et seq to apply, a caveat exists due to the Court of Cassation’s approach.
The Requirement of Being Unilaterally Drafted
The requirement of being unilaterally prepared beforehand is an indication that the terms have been prepared not for a particular contract, but for multiple prospective contracts.[14] The unilaterality element supposes that the counterparty is not included in the preparation of the general terms and conditions.[15] After being unilaterally prepared, the general terms and conditions are submitted to the counterparty at the time when the contract is to be executed. It would not be possible to argue that a contract constitutes general terms and conditions where the contractual provisions are drafted with the contribution of both parties.[16] However, the mere fact that a contract was not drafted by the party imposing it would not prevent such contract from being classified as general terms and conditions.[17]
The Intention to Use in Subsequent Contracts
The law explicitly mentions the intention of using general terms and conditions in multiple subsequent transactions. Therefore, contracts prepared for one-off occasions would not constitute general terms and conditions notwithstanding that they are drafted by one side.[18] However, there is no requirement that such terms actually be used in subsequent contracts.[19]
Lack of Negotiation
The third and most challenging element for classifying general terms and conditions is lack of negotiation between the parties. This is because it is very difficult to pinpoint the threshold after which one might conclude that the parties have effectively negotiated. TCO Art. 20(3) provides that provisions stating that the general terms and conditions were negotiated are not, per se, sufficient to conclude that they are not general terms and conditions. When one would be able to assert that the relevant terms have become the parties’ common product through negotiation is not something that can be clarified in the statute. Therefore, it must be determined on a case-by-case basis. Generally speaking, it is possible to observe that the general terms and conditions are submitted to the counterparty with the expectation that it will accept such conditions without any negotiation.[20]
TCO’s Scrutiny for General Terms and Conditions
Once the general terms and conditions are identified, the TCO’s relevant scrutiny provisions are triggered. In this respect, according to TCO Art. 21(1), in order to insert general terms and conditions which are contrary to the interest of the counterparty into a contract, (a) the party who prepared the contract must explicitly inform the counterparty as to the existence of such onerous provisions, (b) it shall give the counterparty the opportunity to learn about these provisions and (c) the counterparty must accept such provisions. In the event these conditions are not met, the relevant provisions will be regarded as “unwritten.” Furthermore, TCO Art. 21(2) provides that those general terms and conditions which are not in accordance with the nature of the contract or the particularities of the transaction will also be regarded as unwritten. Finally, TCO Art. 24 provides that those provisions in the general terms and conditions giving the drafting party the authority to make changes against the interest of the counterparty will be deemed as unwritten.
Being Deemed as Unwritten
The legal nature of being deemed as unwritten is debated in the literature. This is due to the fact that it does not directly fall into one of the categories of invalid contracts under Turkish law. These categories are as follows: Firstly, when the necessary elements of a contract are not fulfilled, the contract will be regarded as non-existent. Secondly, when the necessary elements are fulfilled but the contract does not comply with the formative requirements or the content of the contract is against the mandatory provisions of law, morals, personal rights or public order, the contract will be in existence but without any legal effect. A third type of invalidity is voidability, which gives the innocent party the right to cancel the legal transaction. A final type of invalidity is deficiency, whereby the formative elements of the legal transaction are satisfied, but in order for it to be valid, an additional requirement must be fulfilled until which time the validity of the legal transaction is suspended. The question here is how the sanction of being deemed unwritten fits into these types of invalidity recognized under Turkish law.
According to one opinion, being deemed as unwritten means that the parties’ agreement does not cover the relevant provisions and therefore they are not incorporated into the contract.[21] Accordingly, what is meant by being deemed as unwritten is being non-existent.[22] Another opinion argues that the type of invalidity referred here is absolute invalidity.[23] Some authors suggest that it is not possible to classify the invalidity regulated here as non-existence or absolute invalidity and therefore, it should be regarded as a sui generis invalidity.[24] Finally, some argue that the type of invalidity shall be determined based on which provision of the TCO such general terms and conditions contradict.[25] In the dissenting opinions of some Court of Cassation decisions, it is possible to see that the sanction of being deemed as unwritten is classified as “non-existence”.[26] Nonetheless, the debate is yet to be settled.
Conclusion
General terms and conditions are frequently used in commercial dealings. It is possible to observe that the users of such general terms and conditions tend to be very reluctant to make changes to their terms. Depending on the parties’ balance of negotiation power (or lack thereof), the party to whom general terms and conditions are submitted may only be able to have the counterparty agree to make changes on very crucial matters. In such case, it may be well possible that a court of law may conclude that at least some contractual provisions may be deemed as unwritten. However, the uncertainties as to the legal nature of this invalidity and when it will be applied to transactions between merchant parties should be resolved in the interest of legal certainty.
- Shatar, Omni Ben / White, J. James: Boilerplate: The Foundation of Market Contracts, Cambridge University Press, Cambridge 2007, p. 29 – 44, https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1046&context=book_chapters (Date of Access: 17.01.2022).
- Hansu, Esra: Genel İşlem Şartlarında Yazılmamış Sayılma, Prof. Dr. Hüseyin Hatemi’ye 80. Yıl Armağanı, On İki Levha Yayıncılık, İstanbul 2018, p. 544.
- Şeker, Muzaffer: Yazılmamış Sayılma, On İki Levha Yayıncılık, İstanbul 2015, fn. 1.
- The painting may be viewed from the following link: https://www.museodelprado.es/en/the-collection/art-work/duel-with-cudgels-or-fight-to-the-death-with-clubs/2f2f2e12-ed09-45dd-805d-f38162c5beaf (Date of Access: 17.01.2022).
- Atamer, M. Yeşim: Sözleşme Özgürlüğünün Sınırlandırılması Çerçevesinde Genel İşlem Şartlarının Denetlenmesi, Beta Yayınevi, İstanbul 2001, p. 9. (Sözleşme Özgürlüğünün Sınırlanması)
- Yeniocak, Umut: Borçlar Kanunu Hükümlerine Göre Genel İşlem Koşullarının Yargısal Denetimi, TBB Dergisi, 2013(107), p. 76. http://tbbdergisi.barobirlik.org.tr/m2013-107-1288 (Access Date: 17.01.2022).
- Atamer, p. 30.
- Reisoğlu, Safa: Borçlar Hukuku Genel Hükümler, Beta Basım, İstanbul 2011, p.69; Eren, Fikret: 6098 sayılı Borçlar Kanunu’na göre hazırlanmış Borçlar Hukuku Genel Hükümler, Yetkin Yayınları Ankara, 2019, p. 232; Havutçu, Ayşe: Tüketicinin Genel İşlem Şartlarına Karşı Korunması, Güncel Hukuk Yayınları, İzmir, 2003, p. 80.
- Şeker, p. 232.
- Dağdelen, Ahmet Hakan: Genel İşlem Şartları ve Teşmil ile Yürürlük Denetiminin Esasları, Marmara Üniversitesi Hukuk Fakültesi Hukuk Araştırmaları Dergisi, C:25 S:2, p. 639. https://dergipark.org.tr/en/download/article-file/909979 (Date of Access: 17.01.2022); Ulusan, İlhan: Türk Borçlar Kanunu’ndaki Genel İşlem Şartlarına İlişkin Yeniliklerle İlgili Bazı Düşünceler, Prof. Dr. Mustafa Dural’a Armağan, Filiz Kitabevi, 2013, p.1219-1228.
- Dağdelen, p. 639.
- Oğuzman, Kemal / Öz, Turgut: Borçlar Hukuku Genel Hükümler, Cilt: 1, Vedat Kitapçılık, İstanbul 2020, p. 28; Ersöz/Oğuz: Genel İşlem Koşullarının Kişi Bakımından Uygulama Alanı Ve Tacirler Hakkında Uygulanması, p, 77 and 78.
- Court of Cassation 19th Civil Chamber E. 2016/9737, K. 2017/5110, t. 19.06.2017; Court of Cassation 19th Civil Chamber E. 2016/19089, K. 2017/4156, t. 24.05.2017, www.kazanci.com (Date of Access: 17.01.2022); “Although articles 20 – 25 of the TCO regarding general terms and conditions are also applicable to merchants, as against the Turkish Commercial Code article 18(2), care must be exercised for implementing and evaluating general terms and conditions for merchants.” See: Court of Cassation 17th Civil Chamber E. 2017/1825, K. 2018/6690, t.03.07.2018, www.lexpera.com (Date of Access: 17.01.2022).
- Yelmen, Adem: Türk Borçlar Kanunu’na Göre Genel İşlem Şartları, Yetkin Yayınları, Ankara 2014, p. 53; Eren, p. 232; Hansu, p. 245.
- Arıkan, Mustafa: 6098 Sayılı Türk Borçlar Kanunu’nda Genel İşlem Koşulları, Prof. Dr. Cevdet Yavuz’a Armağan, 6098 Sayılı Türk Borçlar Kanunu Hükümlerinin Değerlendirilmesi Sempozyumu, 2011, p. 70.
- Atamer, p. 65.
- Dağdelen, p. 640.
- Atamer M. Yeşim: “Yeni Türk Borçlar Kanunu hükümleri uyarınca genel işlem koşullarının denetlenmesi”, Türk Hukukunda Genel İşlem Şartları Sempozyumu, Ankara, BTHAE, 2012, p. 16.
- Eren, p. 231.
- Eren, p. 232.
- Oğuzman/Öz, p. 166.
- Eren, Fikret: Borçlar Hukuku Genel Hükümler, Yetkin Yayınevi, İstanbul 2012, p. 221; One author suggests that there is a legal presumption suggesting the parties’ intentions do not cover such general terms and conditions See: Şeker, p. 239; Akçaal, Murat: Borçlar Kanunu’nun Genel İşlem Koşullarına Dair Hükümleri Hakkında Bir İnceleme, GÜHFD, C. XVIII, S.1, Y. 2014, s. 58, http://webftp.gazi.edu.tr/hukuk/dergi/18_1_2.pdf (Date of Access: 18.01.2022)
- Hatemi, Hüseyin/ Gökyayla, Emre: Borçlar Hukuku Genel Bölüm, Yetkin Yayınevi, İstanbul 2015, p. 65; Oğuzman/Öz, p. 174.
- Yelmen, p. 105.
- Dağdelen, p. 650.
- Court of Cassation 19th Civil Chamber E. 2016/15199 K. 2018/1308 t. 19.3.2018; Court of Cassation 19th Civil Chamber E. 2017/2603 K. 2018/4681 t. 2.10.2018; Court of Cassation 19th Civil Chamber E. 2015/11095 K. 2016/1859 t. 8.2.2016; Court of Cassation 19th Civil Chamber E. 2016/12655 K. 2017/7280 t. 25.10.2017; Court of Cassation 19th Civil Chamber E. 2016/19900 K. 2017/6042 t. 19.9.2017; Court of Cassation 19th Civil Chamber E. 2015/6276 K. 2015/16034 t. 2.12.2015; Court of Cassation 19th Civil Chamber E. 2015/12903 K. 2016/5230 t. 23.3.2016, www.lexpera.com (Date of Access: 02.02.2022).
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