What is a contract for creating a work?
Article 470 – A contract for work is a contract in which the contractor undertakes to create a work, and the employer undertakes to pay a fee in return. A contract for work is the type of contract where the employer requests the contractor to create a work for a fee. The elements of a contract for work are:
- Creation of a work
- Payment of a fee or a promise to pay a fee in exchange for the creation of the work.
- The formation of a voluntary contract based on the agreement of the parties.
When these elements are present, it can be said that a contract for work has been established.
A contract for work is an agreement between the contractor, who undertakes to create a new work, modify an existing one, or repair it, and the employer, who undertakes to pay a fee for these tasks. A contract for work is a voluntary agreement that imposes obligations on both parties. There are no formal requirements for a contract for work. It can be made either verbally or in writing.
The obligations of the employer and the contractor:
In addition to the contractor’s duty of loyalty and care, there is also an obligation to start and continue the work on time. The delivery of the work is also one of the obligations the contractor must fulfill.
The obligations of the employer are as follows:
ARTICLE 479- The employer’s obligation to pay the price becomes due at the moment of delivery of the work.
If it has been agreed that the work will be delivered in parts and the price is determined per part, the price of each part becomes due at the time of its delivery.
Determination of the price: The types of prices determined by the law are divided into approximate price and lump sum price. When the fee is agreed as a lump sum price, according to Article 480 of the Turkish Code of Obligations (TBK), the cost of the work to be produced must be determined in advance with certainty. In the case of an agreement for a lump sum price, the contractor must produce the work for that specified amount. Another type of price, the approximate price, is regulated under Article 481 as follows: “If the price of the work has not been determined in advance or has been determined approximately, the price is determined by considering the value of the work and the contractor’s expenses at the place and time it is made.”
If it is understood that the initially approximately determined price will be exceeded excessively without the fault of the employer, the employer may terminate the contract either before or after the completion of the work.
a. Lump sum price
ARTICLE 480 – If the price is determined as a lump sum, the contractor is obliged to complete the work for that price. Even if the work requires more labor and expenses than anticipated, the contractor cannot request an increase in the agreed price.
However, if unforeseen circumstances or situations that were foreseeable but not considered by the parties prevent the execution of the work at the agreed lump sum price or make it extremely difficult, the contractor has the right to request the court to adapt the contract to the new conditions. If adaptation is not possible or cannot be expected from the other party, the contractor has the right to terminate the contract. In cases where the principles of good faith require it, the contractor may only exercise the right of termination.
Even if the work requires less labor and expenses than anticipated, the employer is still obliged to pay the full agreed price.
ARTICLE 481 – If the price of the work has not been determined in advance or has been set approximately, the price shall be determined based on the value of the work at the time and place it is performed, as well as the contractor’s expenses.
As understood from the legal provisions, even if the agreed price for the work changes, the contractor cannot demand an increase in the price. However, in cases specified by law, it is possible to apply to the court and request the adaptation of the contract. If the work is completed at a lower cost than the agreed price while meeting the required conditions, this does not grant the employer the right to request a reduction in the price. The employer is obliged to pay the agreed price.
Defect in the Contract for Work (Eser Sözleşmesinde Ayıp)
ARTICLE 474 – After the delivery of the work, the employer must examine the work as soon as possible according to the ordinary course of business and notify the contractor of any defects within a reasonable period.
Each party may request, at their own expense, that the work be examined by an expert and that the results be determined in a report.
ARTICLE 475 – In cases where the contractor is responsible for defects in the work, the employer may exercise one of the following options:
If the work is so defective or non-compliant with the contract that the employer cannot use it or cannot be reasonably expected to accept it, they may rescind the contract.
Withholding the work and requesting a price reduction in proportion to the defect.
If it does not require excessive costs, the employer may request the defect to be repaired free of charge, with all expenses borne by the contractor.
The employer’s right to claim compensation under general provisions remains reserved.
If the work has been carried out on the employer’s immovable property and its removal would cause excessive damage, the employer cannot exercise the right to terminate the contract.
Once the existence of a defect is determined, the employer is granted several alternative rights. The employer may withdraw from the contract, request a price reduction in proportion to the defect, or demand the contractor to remedy the defect. Exercising these rights does not eliminate the employer’s right to claim compensation. Even if these rights are exercised, the employer can still request compensation. If terminating the contract would place an excessive financial burden on the contractor, the judge may prevent the employer from exercising the right to terminate.
In the decision of the 14th Civil Chamber of the Court of Cassation dated 25.09.2012, numbered 9832/10921, it is stated that:
“…In order to speak of the contractor’s liability for defects, apart from other conditions, the work must have been produced defectively and delivered to the employer in this state, the defect must have originated from the contractor, and the employer must have inspected the work and notified the contractor of any defects.
At this point, it should be noted that the defect notification and the time limits stipulated in Article 25 of the Turkish Commercial Code (TTK) apply to commercial sales. In other words, Article 25 of the TTK has no application in disputes arising from contracts for work.
In contracts for work, if the work contains an apparent defect, the defect notification must be made within a reasonable time after the delivery of the work, following its inspection in accordance with Article 474 of the Turkish Code of Obligations No. 6098. If the work contains hidden defects, the defect must be notified as soon as it is discovered, as stipulated in Article 477 of the same law.
The defect notification can be made in writing or orally.” (14th Civil Chamber, 25.09.2012; 9832/10921)
Cases of the Destruction of the Work in a Contract for Work
ARTICLE 483 – If the work is destroyed due to an unforeseen event before delivery, the contractor cannot demand payment for the work performed or reimbursement of expenses unless the employer has defaulted in accepting the work. In this case, any damage to the materials shall be borne by the party who supplied them.
If the work is destroyed due to defects in the materials provided by the employer or the land designated by the employer, or because the work was carried out in accordance with the employer’s instructions, the contractor may demand payment for the work performed and reimbursement of expenses not included in the value of the work, provided that the contractor has duly informed the employer of the potential adverse consequences in a timely manner. If the employer is at fault, the contractor also has the right to claim compensation for additional damages.
If, before delivery, the employer defaults in fulfilling the obligation to accept the work, the employer shall be responsible for its destruction due to accidental events or force majeure. In such cases, the contractor may demand reimbursement of expenses and payment of the agreed fee. If the employer has not defaulted, they have the right to withdraw from the contract.
ARTICLE 485 – If the completion of the work becomes impossible due to an unforeseen event related to the employer, the contractor may demand the value of the work performed and reimbursement of expenses not included in this value. If the employer is at fault for the impossibility of performance, the contractor has the right to claim compensation.
Contractor’s ability to subcontract the work
In cases where the nature of the work requires that the person performing the work must exclusively be the contractor, it is not possible for the work to be carried out by someone else. For example, if a famous painter who is paid to create a painting hires someone else to do it, it is considered that the contractor has failed to fulfill the performance obligation arising from the work contract. However, if the person performing the work has the necessary knowledge and skills, and the nature of the work does not specifically require it to be done by the contractor, it is possible for the work to be subcontracted to another person. For instance, if you pay a construction worker to build a wall, and the worker hires another to do the job, the performance obligation is still considered fulfilled.
Relevant Court of Cassation Rulings
The same principle applies in the decision of the 15th Civil Chamber of the Court of Cassation dated February 15, 2018, numbered E. 2017/7, K. 2018/621: “…Defect, according to the law or the provisions of the contract, refers to the absence of required characteristics or the presence of defects that should not be present in a work or goods. In the case where the contractor’s work is defective, contrary to his obligations towards the employer; in the case of obvious defects, the contractor may benefit from the rights defined in Article 475 of the Turkish Code of Obligations if he notifies the employer in accordance with Articles 474 for obvious defects and 477 for hidden defects. If the work has a defect, the employer may exercise one of the optional rights listed in Article 475 of the Turkish Code of Obligations, provided that the employer has notified the defect within the prescribed period.”
The decision of the 15th Civil Chamber of the Court of Cassation dated February 18, 1992, numbered 1991/3700, K. 1992/695.
Summary: In the case of denial of the contractual relationship, the plaintiff must prove the existence of the contract in accordance with legal conditions. (Article 200 of the Civil Procedure Code No. 6100)
The plaintiff claims that the relationship between the parties is a contract for work, while the defendant argues that it is not a work contract but a SERVICE CONTRACT, and that the plaintiff worked as a laborer in the construction project. The plaintiff must prove that the contractual relationship is a work contract in accordance with Articles 288 and subsequent provisions of the Civil Procedure Code (HUMK). However, the plaintiff has failed to present a written contract on this matter. Since the defendant objected to the hearing of witnesses, the witness testimony is also not possible.
The decision of the 15th Civil Chamber of the Court of Cassation dated November 17, 1986, Case No. 1986/830, Decision No. 1986/3860.
Summary: The delivery of the construction cannot be considered legally complete unless it is in a condition to be used according to objective criteria, with the existing deficiencies addressed.
As a rule, a construction or project to be built can only be delivered after it is fully completed. The liability for defects also arises when the work has been physically and completely delivered. It is accepted by both the Court of Cassation and the Swiss Federal Court that the delivery is considered complete only when all the works agreed upon in the contract have been completed and executed, and that delivery and handover cannot be discussed for an incomplete project.
Therefore, the completion of a project can only be determined when it is found to be usable in accordance with objective criteria. UNTIL THE CONTRACTOR ACHIEVES THIS, THE EMPLOYER IS NOT LIABLE TO PROVIDE A DEFECT NOTICE. In other words, the employer cannot benefit from the obligation of defect notification until the work is legally and practically completed and delivered.
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