Economic uncertainties and raw material crises are making contractual relationships in the supply chain increasingly critical. Rising costs, delivery delays, and quality issues cause manufacturers and suppliers to face both economic and legal risks. Attorney Elif Görgülü evaluated the importance of force majeure and adjustment clauses in contracts, the measures parties can take against crises, and how a balanced operation can be maintained in the supply chain.
Economic uncertainties, sudden changes in exchange rates, and raw material crises make contractual relationships in the supply chain more critical than ever. Especially in supply contracts that create continuous debt relationships, rising costs, delivery delays, and quality problems bring both economic and legal risks. In this context, we talked with Attorney Elif Görgülü about how suppliers and manufacturers can take precautions against these risks, and the role of force majeure and adjustment clauses in contracts. Görgülü evaluated contract strategies that will keep the rights and obligations of the parties in balance in long-term supply relationships and the legal measures that can be taken against possible crises.
Ms. Elif, how have the economic fluctuations and raw material crises experienced in recent years affected contractual relationships in the supply chain?
The most common problems encountered in supply contracts include difficulty in performing the obligation due to rising costs, defective performance, delays in delivery, and damage during the delivery of goods. These problems sometimes stem from the parties' own faults, but most often from economic fluctuations, breaks in the supply chain, or external factors that qualify as force majeure. Especially the economic fluctuations and raw material crisis experienced in recent years have caused suppliers to experience problems in providing products and goods services. It has been observed that the uncertain monetary economy market and the difficulties in accessing raw materials have caused a significant widening of the benefit gap between the supplier and the entity being provided with goods and product services in terms of supply contracts that create continuous debt relationships.
What should the parties pay attention to in order not to be affected by these problems?
While preparing supply contracts, parties should clearly define elements such as delivery dates, delivery methods, product standards, quality certificates, inventory management, transfer of risk, and payment terms. It is extremely important to correctly identify the effects of force majeure and economic fluctuations on the contract. Points left uncertain can lead to serious commercial and legal disputes in the future. Especially in long-term supply relationships, issues such as price adjustments, sharing of freight and insurance costs, and the suspension of obligations in case of force majeure should be regulated in detail. It is as important for the parties to remain committed to the contract as it is for the contract to be prepared with the flexibility to adapt to changing economic conditions. Otherwise, one of the parties may fall under a heavy burden due to economic fluctuations, sudden changes in exchange rates, or supply shortages. For this reason, it is indisputable that including protective "adjustment" and "force majeure" clauses in contracts will provide the supplier with greater protection against unexpected effects.
To which legal grounds can companies resort when requesting contract adjustment in the face of cost increases?
Even if there is no provision in the contract, Article 138 of the Turkish Code of Obligations (TBK) regarding "extreme hardship" is a directly applicable norm. What matters is the proof of the elements of "unforeseeability" and "extremity of a nature that makes payment impossible." The manufacturer must prove that the rising costs have exceeded the limits of ordinary commercial risk and that performance cannot be expected from them for this reason. However, in practice, everything starts with documentation and good faith. Providing written notice by the parties at an early stage facilitates the resolution of the process through settlement without taking it to court.
What kind of protection does the concept of "extreme hardship" in Article 138 of the Turkish Code of Obligations provide for the manufacturer and supplier?
As a rule, every merchant is under the obligation to act like a prudent businessperson. This obligation requires the merchant to act more foresightedly, carefully, and cautiously in business and contractual relationships compared to an ordinary person. However, in inflationary environments, extraordinary fluctuations in exchange rates are often unforeseeable even by prudent merchants. In this case, the supplier can file an adjustment lawsuit based on the provisions of extreme hardship within the scope of Article 138 of the Turkish Code of Obligations. If the supplier proves that performing their obligation has become contrary to the rule of good faith due to extraordinary economic conditions that emerged after the signing of the contract, they may request the judge to adjust the contract according to new conditions; if this is not possible, they may request the termination of the contract. Especially in the plastics industry, a several-fold increase in raw material prices or extraordinary increases in energy costs can be evaluated within the scope of this article.
If production quality decreases due to rising costs, who is liable for the resulting defective goods?
This is the breaking point of the matter. When the manufacturer turns to lower-quality raw materials to cut costs, a risk that disrupts the fundamental balance of the contract arises. In accordance with the Turkish Commercial Code (TTK) and the Turkish Code of Obligations (TBK), the manufacturer is responsible for the goods possessing the "qualities agreed upon in the contract." Furthermore, if the product has reached the end consumer, the Law on the Protection of the Consumer comes into play. Therefore, economic justifications — such as cost pressure, exchange rate differences, or supply difficulties — are not of a nature to eliminate the obligation regarding quality. On the contrary, in such crisis periods, "higher care to maintain quality" is expected from the manufacturer. Because the trust formed in the market is measured not only by the price of the product but by the ability to maintain its standard.
Well, can the manufacturer escape liability in this situation on the grounds of "cost pressure" or "force majeure"?
Generally, no. The concept of force majeure relates to external events that make the performance of the debt completely impossible; a decrease in quality is within the manufacturer's area of control. For example, if there is an import ban or a natural disaster that completely prevents the procurement of raw materials, this can be considered force majeure. However, if the manufacturer has chosen a different raw material to reduce costs, this is considered a commercial choice. The Supreme Court is also quite consistent on this issue: Economic difficulties, cost increases, or market contraction are not considered force majeure on their own. Therefore, the manufacturer's deviation from the quality standard due to "cost pressure" can constitute defective performance in the sense of the TBK. Legally, this distinction is important because in the case of force majeure, liability is eliminated; in defective performance, the manufacturer faces risks of both compensation and termination of the contract.
How does the chain of liability between the manufacturer, dealer, and consumer work in the supply chain?
Essentially, the plastics industry is built on a full-fledged chain production model. There is a structure that starts from the raw material supplier and extends to the manufacturer, distributor, dealer, and end consumer. Each link is obliged to fulfill its debts in its own contractual relationship, but if the source of the defect is at the production stage, the manufacturer bears the ultimate responsibility. The point worth mentioning here is the activation of the recourse mechanism. The dealer is the first point of contact for the consumer and is liable to remedy the damage; however, after making this payment, they have the right to recourse to the manufacturer or supplier. For this chain to function healthily, all technical tests, quality certificates, and supply certificates in the production process must be archived completely. Otherwise, proving the source of the defect becomes difficult, and everyone along the chain falls under "collective responsibility."
There are also delivery delays in the supply chain due to force majeure. Are these delays considered defective performance, or are they evaluated within the scope of the right to adjustment?
The nature of the delivery delay is the determining factor here. If the delay is caused by an unforeseeable and inevitable event — such as port strikes, international embargoes, or natural disasters — this situation can be evaluated as force majeure. However, delays caused by disruptions in the business's own internal organization, lack of personnel, or financing problems will not be considered force majeure. Two basic criteria are examined while making this distinction; does the party have fault in the delay? Was the event foreseeable by a reasonable merchant when the contract was established? If the two criteria are not met together, the delay can fall within the scope of "defective performance." However, if a truly external crisis is involved, the manufacturer may request an adjustment in accordance with Article 138 of the TBK or may be exempted from liability with a force majeure defense. For this reason, it is of vital importance that delay, performance, and force majeure provisions are clearly defined in every supply contract.
How do rising costs affect the coverage limits of an insurance policy?
In inflationary periods, production costs, energy, and raw material expenses increase significantly; this raises economic risks in all links of the supply chain. As a result of rising costs: The value of the goods subject to insurance increases, the production process becomes riskier, but the coverage limit in the insurance policy remains constant. In this case, while the risk assumed by the insurer actually increases, the policy coverage becomes insufficient to cover the actual loss. As a result, the supplier may be liable for losses above the policy limit with their own assets. A supplier who does not want to be affected by losses outside the scope of insurance coverage can add protective provisions to the contract regarding this issue. Furthermore, in accordance with the relevant provisions of the Turkish Code of Obligations and the Turkish Commercial Code, it is possible to request the adjustment or renewal of the policy in order to protect the balance of interests between the parties.
In such a complex network of liability, how can businesses minimize their legal risks?
The most effective method is to adopt a "preventive law" approach in contractual relationships. Because most disputes arise from the inability to manage risks that were not foreseen when the contract was made. Scenario analysis should be done in detail before the contract is signed; a balanced structure should be established between the quartet of price, quality, delivery, and liability. In addition, contract management and quality control departments within the company must work in coordination. On one side law, and on the other production planning should sit at the table together, managing the process in cooperation to minimize potential risks. With this cooperation and by adopting the concept of preventive law; the aim should be not only to reduce the risk of litigation but also to prioritize protecting the brand, reputation, and supply chain security.
What steps should be taken to increase the awareness of the plastics industry on this issue and to make protective contracts?
Economic fluctuations, raw material shortages, or currency pressure do not justify fundamentally changing contractual relationships. Both the manufacturer and the supplier must not forget that; the law exists to maintain stability. Revisions made in a hurry today against sudden cost increases can be the cause of tomorrow's most complex disputes. The plastics industry is like a chain; every link is connected to the other with trust. It has to remain connected. The manufacturer must remain loyal to the contract while maintaining quality; the supplier must fulfill its delivery and raw material responsibility with integrity. Because when one link of this chain weakens, not only the economic flow but also the legal balance is disrupted. Reducing quality or stretching delivery obligations due to short-term cost concerns creates temporary relief but leads to permanent loss of reputation. However, well-prepared contracts with clear force majeure and adjustment provisions are the strongest "insurance" that protects both the manufacturer and the supplier. In this context, it is extremely important that realistic and flexible contracts are prepared with legal support. The real test for the industrialist today is to be able to turn contract awareness into an institutional reflex without panicking in the face of crisis. Establishing balance in the supply chain is no longer just an economic issue but one of legal sustainability, and businesses that can maintain this balance will be the reliable brands of tomorrow. The industry's ability to maintain its existence with confidence depends on the existence of contracts prepared within a relationship of trust.
This content has been translated using artificial intelligence technology.