Av. Barış Mükyen, founder of Mükyen Law Firm, explains frequently asked questions regarding additional supplementary sections that are often overlooked in construction contracts.
As a general principle, the parties to a contract are obliged to perform the obligations set out therein in the manner agreed upon. A debtor may not, as a rule, perform anything other than the obligation undertaken, and equally, the creditor is not bound to accept any such substituted performance. The same principle applies to construction contracts concluded in exchange for a share in land. Unless the landowner consents, the contractor may neither carry out additional works beyond those stipulated in the contract, nor extend the construction area horizontally or vertically on the grounds that planning permission permits it. To do otherwise would constitute a breach of contract. In practice, however, it is frequently observed that contractors carry out additional works not provided for in the contract, in particular, enlarging the floor areas of independent units or constructing a greater number of independent units than contractually agreed, where planning conditions so allow.
In such circumstances, what claims may the landowner bring against the contractor?
1. During the course of construction, a change in planning status may create the opportunity to add further independent units to the building or to enlarge existing ones. In such cases, the contractor constructs units in addition to those agreed upon and/or builds them to a larger size than stipulated in the contract. This gives rise to the question of how the surplus area is to be apportioned between the landowner and the contractor.
2. Where independent units are built to a larger size than provided for in the contract, the question of how to apportion the resulting surplus will be resolved by reference to which party’s units have been enlarged. If only the units allocated to the landowner have been built beyond the contractually agreed size, the contractor may make a claim against the landowner in proportion to the sharing ratio set out in the contract. Conversely, if only the units allocated to the contractor have been built to a larger size than agreed, the landowner shall have a corresponding right of claim against the contractor in that same proportion.
The same right of claim arises where the enlargement affects both parties’ units but to differing degrees. In that event, whichever party’s units have been built to a greater size than contractually stipulated, the other party may bring a claim against them to the extent of that surplus. Where, however, both parties’ units have been enlarged by the same proportion, neither party may bring a claim against the other. The Court of Cassation (Yargıtay) takes the same view, holding that where the enlargement in the units allocated to the landowners is equally reflected in the contractor’s units, no change has occurred in the sharing ratio to the landowner’s advantage — in other words, since the increase in construction area has been proportionally distributed across all units in accordance with the contractual ratio, the contractor cannot be regarded as entitled to claim payment on account of the enlargement of the construction area or of the units allocated to the landowners.
3.
(a) Where additional independent units are constructed, the terms governing them may have been expressly agreed by the parties in advance within the contract. In that case, there is no doubt that the contractual provisions will apply to such additional units. The Court of Cassation similarly holds that additional units constructed outside the scope of a land-share construction contract must be distributed between the parties in accordance with the ratio stipulated in the contract. The parties may adopt the same sharing ratio as that applicable to the other units, or they may agree upon a different ratio.
(b) The contract may, on the other hand, contain no provision regarding the basis on which additional independent units are to be governed. It should first be noted that the construction of additional independent units requires the express or implied consent of the landowner; a contractor who constructs additional units without such consent shall be deemed to have breached the contract. This is because the construction of additional independent units requires the landowner to transfer the corresponding land shares to the contractor — which, as a rule, aggravates the landowner’s own obligations under the contract, in addition to those of the contractor. A landowner cannot be compelled to accept a unilateral variation of the scope of the agreed obligations by the contractor alone. However, if the landowner raises no objection to the additional construction during the building phase, they shall be deemed to have ratified it; any subsequent assertion by the landowner that the contractor has acted in breach of contract would constitute an abuse of rights.
(c) Where the contract contains no provision governing additional independent units and the landowner is deemed to have ratified the additional construction, the parties may reach agreement on how the surplus units are to be apportioned. Should they fail to reach such an agreement, it is accepted that the additional independent units shall belong to the contractor and the landowner respectively in proportion to their land shares as set out in the contract. The Court of Cassation likewise takes the view that, where the contractor has extended the scope of construction and no agreement has been reached as to how the surplus is to be distributed, the general sharing ratio provided for in the contract shall apply equally to the apportionment of the additional elements. The costs incurred by the contractor in respect of the additional units are not taken into account when apportioning the surplus.
(d) Where the contract does contain a provision relating to additional independent units but that provision is ambiguous, it will be necessary to interpret the contractual term and ascertain the true intention of the parties.
(e) It has, however, been argued that where an additional independent unit has been transferred to a third party, the foregoing approach would be inappropriate, since the contractual terms cannot apply to third-party purchasers who are not parties to the contract. In such circumstances, it is contended that the entitled party should instead receive a payment calculated on the basis of the market value of the independent units corresponding to the land share proportion to which they are entitled under the contract.
4. Similarly, where planning conditions do not permit the construction of a building of the size provided for in the contract — rendering it impossible to build in contravention of planning rules — the contractor cannot be held liable for any shortfall in the landowner’s share resulting from a reduction in floor area or number of independent units. In such circumstances, the parties shall bear the reduction in independent units in proportion to the sharing ratio set out in the contract.
Furthermore, even where the contract contains no provision for the construction of additional independent units, if the planning conditions are favourable yet the landowner refuses to carry out the necessary project amendments — or declines to grant the contractor a power of attorney for that purpose — on the grounds that the contractor does not hold the requisite authority, such conduct may constitute a breach of the principle of good faith.
Source
https://www.habereguven.com/kat-karsiligi-insaat-sozlesmelerinde-sozlesmeye-ek-ilave-bagimsiz-bolumler/