Liability of the Landowner for Contractor’s Debts to the Third Parties in Revenue Sharing Construction Contracts 4 January 2018
In practice, the contract which the contractor has the obligations to build the construction determined in the contract and act as intermediary for the sale of independent sections whereas the landowner undertakes to sell independent sections to the third parties and to share the revenue which comes from the sale of independent sections with the contractor is named as Revenue Sharing Construction Contracts. However, such contracts are not expressly regulated in our legislation. Within this context, provisions regarding contract types regulated in our legislation are applied comparatively considering the elements included in such contracts, which are characterized as mixed contracts where both parties have reciprocal obligations in the sense of Law of Obligations.
Since there is no explicit regulation in the Law of Obligations, there is no clear provision for whether the legal liability of the landowner for the contractor’s debts to the third parties in Revenue Sharing Construction Contracts arises or not. On the other hand, it is accepted in the doctrine and the jurisprudence of the Supreme Court that two elements are sought in order to go to the legal liability of the landowner for the claims of third parties from the contractor.
In this sense, the first element sought by the Supreme Court and the doctrine is that the contractor shall fulfill his obligations undertaken by him under Revenue Sharing Construction Contracts concluded between the contractor and the landowner. Thus, the Supreme Court accepts that third parties can go to the liability of the landowner based on their legal relationship with the contractor if the contractor fulfils his obligations to the landowner under the construction contract and acquired a personal claim against the landowner. In addition, the second element which is required for the third party to make the landowner liable for the debts of the contractor is that there must be a provision in the Revenue Sharing Construction Contract which allows or disallows this issue. In other words, if there is a provision in the Revenue Sharing Construction Contract between the parties which states that the landowner shall not be held liable for the debts of the contractor to the third parties, the landowner shall not be held liable. However, if there is a provision in the contract contrary to this; the landowner shall be held liable for the debts of the contractor.
Within this context, although it is not explicitly regulated in our legislation, according to the doctrine and Supreme Court decisions, in order to hold the landowner liable for the debts of the contractor to third parties, it should firstly be examined whether the contractor fulfills his obligations under the contract in full and properly. If the contractor fulfills his obligations under the contract in full and properly, the provisions of the Revenue Sharing Construction Contract executed between the contractor and landowner are taken into consideration in order to hold the landowner liable for the debts of the contractor to third parties. Within this scope; if there is a provision in the Revenue Sharing Construction Contract which envisages that the landowner shall be or not be liable for the debts of the contractor to the third parties, it shall be decided that the landowner shall be or shall not be held liable by taking into consideration this provision.
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