1.  In respect of existing business-to-business (B2B) agreements that do not contain an explicit price adjustment clause:
    1. a. Is the supplier permitted to unilaterally increase prices (or does it have other rights regarding price increases)? If so, to what extent?
    2. b. Do (extreme) price increases give the customer the right to terminate the agreement? If so, are there any specific rules or regulations to comply with?
  2.  In respect of future B2B agreements:
    1. a. Is it permissible to include an explicit price adjustment clause in the agreement? If so, what price adjustment clauses typically exist in your jurisdiction?
    2. b. What legal issues need to be considered (if any) to ensure that the price adjustment clause is enforceable? Is there any key legislation or case law that parties should be aware of regarding enforceability of price adjustment clauses in your jurisdiction?
    3. c. Are there any other issues that parties should consider when formulating a price adjustment clause (e.g. any sector-specific regulation)?
  3. Do any additional considerations or rules apply to the inclusion of price adjustment clauses in business-to-consumer (B2C) agreements?

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Turkiye
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1. In respect of existing business-to-business (B2B) agreements that do not contain an explicit price adjustment clause:

a. Is the supplier permitted to unilaterally increase prices (or does it have other rights regarding price increases)? If so, to what extent?

Turkish Contracts Law is based on the principle of freedom of contract and parties can generally determine the content of the agreement freely provided that the limitations stipulated in the laws and regulations are respected. This principle carries two significant implications in contract law. Firstly, no one can be compelled into an obligation against their will and secondly, any agreement entered voluntarily is considered fair.   

An exception to this principle is stipulated under Article 138 of the Turkish Code of Obligations (“TCO”), which provides the possibility of contract adaptation, based on good faith. If the parties are unable to reach an agreement on revising the terms and conditions of a concluded contract, the debtor party has the right to apply to the courts and request the adaptation of the contract based on the new circumstances, as stipulated by Article 138 of the TCO or, in case it is not possible, request exercising the right to terminate.  

The criteria for adaptation of contract are as follows:  

  • An extraordinary event that was not anticipated or could not have been anticipated at the time of contract conclusion must have occurred. 
  • The party seeking adaptation should not have been the cause of the extraordinary event. 
  • The extraordinary event should have changed the circumstances to such an extent that requesting performance of the contract would violate the good-faith principle. 
  • The party requesting adaptation should not yet have performed its obligation or performed by reserving their rights arising from excessive difficulty of performance. 

Additionally, Article 138 also applies to foreign currency debts. In cases where performance becomes impracticable due to unforeseeable changes that occur after the contract is concluded, the contract can be revised to adapt these changing conditions. Guided by the principle of good faith, the assessment should focus on whether it is reasonable to expect performance despite the changing circumstances. 

Please note that the Supreme Court often rejects the adaptation request when the parties are commercial parties considering that they must “act as prudent merchants” meaning that they must act with duty of care and be able to foresee the legal, financial, and commercial consequences of their actions. Therefore, for B2B agreements, it is likely that the court rules that the “foreseeability” criteria are not met.

b. Do (extreme) price increases give the customer the right to terminate the agreement? If so, are there any specific rules or regulations to comply with?

Parties of a contract must honour the commitments they have willingly made and are expected to fulfil their obligations, regardless of any difficulties in performance. However, the customer may have the option to terminate the agreement if there are reasonable grounds to do so. While the specific provisions of the contract will determine the customer's right of termination, this right must still be used in line with the principles of good faith.  

The determination of what constitutes reasonable grounds for termination may depend on various factors such as the nature of the contract, the extent of the price increase, the impact on the customer's ability to fulfil their obligations. Supplier contracts are contracts that require consecutive performance of obligations and may be terminated if there are reasonable grounds. Reasonable grounds may arise from violation of contract or perpetuity of the contract may be imperilled due to independent external factors.  

As explained above, pursuant to Article 138 of TCO regarding adaptation of contracts, if it is not possible to adapt the contract based on new circumstances, the debtor may have the right to terminate the agreement as well. 

2. In respect of future B2B agreements:

a. Is it permissible to include an explicit price adjustment clause in the agreement? If so, what price adjustment clauses typically exist in your jurisdiction?

Yes. Price adjustment clauses mostly focus on fluctuations in currency exchange rates or inflation rates. 

Under Turkish law, parties have the freedom to determine the terms of a contract. In the meantime, they must act in line with the principle of good faith as per Article 2 of the Turkish Civil Code and must respect the boundaries set by the law. For instance, pursuant to Article 27 of the TCO, contracts contradicting mandatory rules of law, morality, public order, personal rights, or those with illegal subjects are considered null and void. The nullity of some of the provisions of the contract does not affect the validity of other provisions. However, if it is clearly understood that the contract cannot be executed without these provisions, the entire contract will be null and void. In addition, for certain specific types of contracts such as lease agreements, there may be statutory limitations to price increases and any clauses which go beyond these limitations may be deemed unenforceable.

c. Are there any other issues that parties should consider when formulating a price adjustment clause (e.g. any sector-specific regulation)?

Article 138 of the TCO applies to various types of contracts, however, specific provisions of the TCO govern specific contracts exclusively. 

Article 480 of the TCO which applies to construction agreements states that even if the work requires more effort and expense than originally anticipated, the contractor cannot request an increase in the predetermined price. However, if unforeseeable circumstances arise or if circumstances that could have been foreseen but were not considered by the parties make it extremely difficult or impossible to perform the work within the agreed price, the contractor may rely on adaptation provisions and request the court to adapt the contract to the new conditions. 

On the other hand, most of the Supreme Court’s precedents regarding adaptation requests pertain to long-term lease contracts and foreign exchange loan agreements. When it comes to adaptation requests based on higher currency exchange rates, the Supreme Court has had contradictory precedents. In some decisions, the Supreme Court has overruled the decisions of first-instance courts due to insufficient examination of whether the exchange rate had caused an unforeseeable event while there are also precedents where the Supreme Court has rejected adaptation requests by stating that fluctuations in currency exchange rates are predictable considering the economic structure and dynamics of Turkey. 

For public sector contracts, there are special requirements for price adjustments due to raw material price increases. Please refer to our CMS Expert Guide on rising raw material prices.

3. Do any additional considerations or rules apply to the inclusion of price adjustment clauses in business-to-consumer (B2C) agreements?

Pursuant to Article 5 of the Consumer Law, contract provisions that are included without negotiation with consumers and create an imbalance in the rights and obligations of the parties, against the consumers, thereby violating the principle of good faith are deemed unfair terms and considered null and void. Therefore, if a price adjustment clause is deemed as an unfair term, it would be considered null and void as well. In accordance with Article 8 of the Regulation on Unfair Terms in Consumer Contracts, the Ministry of Trade is responsible for taking necessary measures to eliminate unfair terms from contracts intended for general use or to prevent their usage. Accordingly, the party that drafts the agreement is granted 30 days by the Ministry to remove such terms from the agreement.