Price Increase Dispute Under a Long-Term Commercial Contract in Turkey: Can the Contract Be Adapted? (2026 Updated Guide)

Can a long-term commercial contract in Turkey be adapted after extraordinary price increases? Learn about hardship, excessive difficulty of performance, renegotiation, court adaptation, termination and evidence.

Long-term commercial contracts can become economically difficult when inflation, exchange-rate movements, energy costs, raw-material prices, transportation expenses, new taxes, regulatory changes or unexpected market disruptions substantially increase the cost of performance. A supplier may argue that continuing at the original price would cause severe losses, while the buyer may insist that the agreed price remains binding. Under Turkish law, the starting principle is that contracts must be performed as agreed. However, in exceptional circumstances, adaptation of the contract may potentially be requested where unforeseen developments fundamentally disturb the contractual balance and make performance excessively burdensome for one party. Whether a price increase is legally sufficient depends on the contract, allocation of commercial risk, foreseeability of the event, conduct of the parties and evidence demonstrating the economic impact.

Can a Long-Term Commercial Contract Be Adapted Because Costs Increased?

Potentially, but an ordinary increase in the cost of doing business does not automatically justify judicial adaptation. Commercial parties are generally expected to bear normal market risks.

The issue becomes more significant where an extraordinary development fundamentally changes the circumstances existing when the contract was signed and creates a serious imbalance between the parties’ obligations.

Turkish Code of Obligations Article 138 and Excessive Difficulty of Performance

The principal statutory framework for adaptation because of radically changed circumstances is Article 138 of the Turkish Code of Obligations, which regulates excessive difficulty of performance.

In general terms, adaptation may become relevant where an extraordinary circumstance that was not foreseen and could not reasonably have been expected by the debtor at the time of contracting arises for a reason not attributable to that party, fundamentally changes the circumstances against the debtor and makes performance contrary to good faith under the original terms.

The statutory conditions must be assessed together rather than treating Article 138 as a general right to increase prices.

A Price Increase Alone Is Usually Not Enough

A supplier cannot normally obtain adaptation merely by demonstrating that its profit margin has decreased.

The key question is whether the changed circumstances have disturbed the contractual equilibrium to such a degree that requiring performance under the original conditions would become excessively burdensome within the meaning of the applicable legal framework.

Foreseeability Is Critical

One of the first questions is whether the alleged development could reasonably have been anticipated when the contract was executed.

If the parties signed a long-term contract during a period of substantial market volatility, a court may examine whether price fluctuations were already foreseeable and should have been addressed contractually.

Inflation Requires Case-Specific Analysis

Inflation can materially affect long-term contracts, but inflation alone should not automatically be treated as sufficient for adaptation.

The date of the agreement, duration, pricing mechanism, industry, historical volatility, bargaining position of the parties and magnitude of the subsequent change can all become relevant.

Exchange-Rate Increases Can Create Disputes

A supplier purchasing components in foreign currency while selling at a fixed local-currency price may experience substantial cost increases following currency depreciation.

Whether this supports adaptation depends heavily on the contractual risk allocation and whether currency exposure was foreseeable when the agreement was concluded.

Raw-Material Price Increases

Steel, chemicals, agricultural commodities, electronic components and other inputs can experience substantial price movements.

The supplier should demonstrate the actual effect of the increase on the specific contract rather than relying solely on general market statistics.

Energy Cost Increases

Energy-intensive manufacturers may argue that extraordinary electricity, natural-gas or fuel costs have fundamentally altered the economics of production.

Historical invoices, consumption data and cost accounting can be important evidence.

Transportation and Freight Costs

Unexpected increases in freight, container, insurance or logistics costs may also affect contract performance.

The contract should first be reviewed to determine which party accepted transportation-related risks.

New Customs Duties and Trade Measures

Anti-dumping duties, safeguard measures, additional import charges or other trade restrictions introduced after execution of a supply contract can materially change landed costs.

The legal analysis should determine whether the contract already allocates customs and regulatory risks.

New Taxes and Regulatory Costs

A legislative or regulatory change may create costs that did not exist when the parties contracted.

Tax clauses, change-in-law provisions and regulatory-compliance clauses should therefore be reviewed before relying on general hardship principles.

Fixed-Price Contracts Require Special Attention

A fixed price often indicates that the parties deliberately allocated some price risk.

However, describing a contract as “fixed price” does not necessarily answer every possible extraordinary-circumstances question. The nature and extent of the assumed risk must still be examined.

Price Adjustment Clauses Can Be Decisive

Many sophisticated long-term agreements contain formulas linking prices to inflation, commodity indexes, exchange rates, labor costs or other benchmarks.

Where the parties expressly agreed on a price-adjustment mechanism, that mechanism will generally be central to the dispute.

Price Caps and Floors Should Be Reviewed

A contract may permit adjustment while limiting the maximum annual increase.

A party should not bypass an agreed cap simply because market prices later become unfavorable without first analyzing the legal effect of the negotiated allocation of risk.

Hardship Clauses May Require Renegotiation

International and sophisticated domestic agreements frequently include hardship clauses requiring the parties to renegotiate when defined economic events occur.

The exact trigger should be examined carefully. A contractual hardship clause may impose requirements different from the general statutory framework.

Change-in-Law Clauses

Where the price increase results from legislation, sanctions, customs measures, environmental requirements or another regulatory development, a change-in-law clause may provide a more direct contractual remedy.

The clause may allocate the additional cost to one party or establish a renegotiation mechanism.

Force Majeure and Hardship Are Different

Businesses should not automatically describe every price increase as force majeure.

Force majeure generally concerns an obstacle affecting performance, while hardship or excessive difficulty may involve circumstances where performance remains possible but has become extraordinarily burdensome.

The distinction can materially affect available remedies.

Commercial Impossibility Is Not Automatically Legal Impossibility

A transaction becoming unprofitable does not necessarily mean performance has become legally impossible.

This distinction is important when determining whether the appropriate argument concerns adaptation, termination, impossibility or ordinary contractual risk.

Can the Supplier Unilaterally Increase the Price?

Normally, a party should not assume it can simply issue an invoice at a higher price because its costs increased.

The right to adjust prices must arise from the contract, applicable law, agreement between the parties or another legally sustainable basis.

An unauthorized unilateral increase can itself create a contractual breach.

Can the Buyer Refuse the Increase?

If the contract contains no applicable adjustment right and the parties have not agreed to a modification, the buyer may dispute the proposed increase.

However, the buyer should still evaluate whether the supplier has a credible hardship or adaptation claim before taking aggressive termination or replacement measures.

Renegotiation Is Often the First Commercial Solution

Before litigation, the parties may attempt to restructure the pricing mechanism.

Possible solutions include temporary surcharges, revised indexation, shorter price-review periods, minimum purchase commitments, volume adjustments or sharing extraordinary input costs.

Put the Renegotiation Request in Writing

The party seeking adaptation should explain the relevant event, contractual provision, economic effect and proposed solution.

Written correspondence can later become important evidence showing that the party attempted to preserve the contractual relationship.

Do Not Rely Only on General Inflation Data

A supplier should demonstrate how the relevant event affected its actual performance costs.

For example, if the supplier claims a 70% increase in raw-material costs, it should be capable of showing how much those raw materials represent in the total cost of the contracted product.

Prepare a Cost Comparison

A strong evidentiary file may compare the economic assumptions at contract formation with current conditions.

Relevant information can include raw-material costs, labor, energy, freight, exchange rates, customs charges and production expenses.

Accounting Records Can Become Critical

Invoices, purchase orders, supplier contracts, cost-accounting records and financial data can demonstrate whether the claimed burden is genuine.

Internally prepared spreadsheets unsupported by source documents may carry less evidentiary weight.

Timing Matters

A party claiming hardship should not remain silent for an extended period while continuing performance without reservation and later attempt to recover all historical losses.

The timing of notices, reservations and renegotiation requests should be reviewed carefully.

Performance With Reservation Can Be Important

Article 138 specifically makes the status of performance relevant. Where performance has already occurred, whether rights were reserved can become important to the adaptation analysis.

Companies should therefore obtain legal advice before continuing substantial performance while simultaneously claiming that the original contractual terms are unsustainable.

Can the Contract Be Adapted by a Court?

Potentially, where the legal requirements are satisfied and the parties cannot reach agreement.

Judicial adaptation may involve reconsidering the contractual obligation in a manner that restores an appropriate balance within the limits permitted by law and the circumstances of the case.

Does the Court Simply Set the Current Market Price?

Not necessarily.

Contract adaptation is not equivalent to replacing the agreed price automatically with whatever price is currently available in the market. The court must consider the contractual relationship and circumstances underlying the adaptation claim.

Can the Contract Be Terminated If Adaptation Is Impossible?

Under the statutory framework governing excessive difficulty of performance, where adaptation cannot appropriately resolve the situation, termination-related remedies may become relevant depending on the nature of the contract.

For continuing contractual relationships, the applicable consequences should be assessed carefully.

Long-Term Supply Agreements Need Special Analysis

A ten-year supply relationship presents different commercial considerations from a single purchase order.

Duration, investment commitments, exclusivity, minimum quantities and dependency between the parties may all affect the appropriate remedy.

Minimum Purchase Obligations Can Complicate the Dispute

A buyer may be required to purchase minimum quantities while the supplier claims that the agreed price is no longer economically sustainable.

Both obligations should be analyzed together rather than examining price in isolation.

Take-or-Pay Provisions

Long-term energy, industrial and commodity contracts may include take-or-pay mechanisms.

Price adaptation can affect not only the unit price but also minimum-payment exposure and termination calculations.

Exclusivity Clauses Can Increase Pressure

A buyer prohibited from purchasing from alternative suppliers may face serious operational risks if the existing supplier refuses to perform at the original price.

Urgent legal and commercial strategy may therefore be necessary.

Can the Supplier Suspend Deliveries?

A supplier should not assume that a hardship allegation automatically creates a right to suspend performance.

Unlawful suspension can expose the supplier to damages, contractual penalties or termination claims.

Can the Buyer Purchase From Another Supplier?

This depends on the contract and circumstances. Before cover purchases are made, review exclusivity, cure periods, termination rights and notice provisions.

Preserve evidence of replacement costs if damages may later be claimed.

Contractual Penalties Should Be Reviewed

A supplier refusing to deliver because of a price dispute may face contractual penalties.

Whether those penalties remain enforceable in the circumstances may itself become part of the dispute.

Bank Guarantees May Create Additional Risk

Some long-term contracts are secured by performance guarantees.

A pricing dispute can therefore escalate into a guarantee-call dispute if one party treats non-performance as a contractual default.

Foreign Companies Should Review Governing Law

Not every contract involving a Turkish company is governed by Turkish law.

Before relying on Article 138 or another Turkish-law remedy, determine the governing law and dispute-resolution clause.

Arbitration Clauses Matter

International supply agreements frequently require arbitration.

A contract-adaptation claim may therefore need to be brought before an arbitral tribunal rather than a Turkish state court.

Jurisdiction Clauses Should Be Checked

If the contract designates Turkish courts, identify the competent court and any procedural prerequisites before litigation.

Mediation Requirements May Apply

Depending on the nature of the commercial dispute and relief sought, mandatory mediation rules applicable to Turkish commercial disputes should be considered before initiating proceedings.

Interim Measures May Become Necessary

If one party threatens immediate termination, suspension of essential deliveries or enforcement of security, interim judicial protection may need to be evaluated.

The requirements depend on the relief requested and circumstances.

Preserve Communications

Emails, meeting minutes, price negotiations, cost warnings and contract amendments can become central evidence.

They may show what risks the parties anticipated when negotiating the original agreement.

Prior Price Adjustments Can Matter

If the parties repeatedly modified the price despite a nominally fixed-price contract, their historical course of dealing may become relevant to interpretation.

Preserve previous amendments and invoices.

Do Not Fabricate a Hardship Narrative

A company should not selectively present only unfavorable costs while concealing corresponding savings or price increases received elsewhere.

The economic analysis should be credible and capable of surviving expert examination.

Expert Evidence May Be Necessary

Complex adaptation disputes may require financial, accounting, industry or engineering experts.

Expert analysis can help distinguish ordinary commercial risk from a fundamental disruption of contractual equilibrium.

Foreign Supplier Versus Turkish Buyer

A foreign supplier may face a Turkish buyer insisting on the original price while the supplier’s production costs have increased dramatically.

The supplier should analyze governing law, hardship provisions, price-adjustment clauses, notice requirements and dispute-resolution mechanisms before refusing further deliveries.

Turkish Supplier Versus Foreign Buyer

The reverse situation can also arise where a Turkish manufacturer is locked into a long-term export contract.

The same contractual and governing-law analysis is necessary before seeking adaptation.

2026 Contract Management Strategy

Businesses entering long-term contracts in 2026 should avoid relying entirely on general hardship law. Contracts can be drafted with detailed price-review formulas, commodity indexes, exchange-rate mechanisms, regulatory-change clauses, renegotiation triggers, adjustment caps, extraordinary-cost sharing and termination mechanisms.

Clear risk allocation reduces future uncertainty.

Immediate Action Plan

When a long-term commercial contract becomes economically unsustainable because of price increases, the affected company should immediately review the governing law, price-adjustment mechanism, hardship clause, force-majeure provision, change-in-law clause, termination rights and dispute-resolution mechanism. It should identify the extraordinary event, calculate its actual effect on performance, preserve invoices and accounting evidence, provide timely written notice, reserve rights where appropriate, propose a commercially realistic renegotiation and evaluate judicial or arbitral adaptation before unilaterally suspending performance.

Frequently Asked Questions

Can inflation alone justify contract adaptation in Turkey?

Not automatically. The complete circumstances, foreseeability, contractual risk allocation and degree of economic disruption must be evaluated.

Can a supplier increase the contract price unilaterally?

Only where a contractual or other legally sustainable basis permits it. Cost increases alone should not automatically be treated as a unilateral pricing right.

Can exchange-rate movements justify adaptation?

Potentially, but foreseeability and contractual allocation of currency risk are particularly important.

What is Article 138 of the Turkish Code of Obligations?

It provides the principal statutory framework concerning excessive difficulty of performance arising from extraordinary changed circumstances, subject to specific legal conditions.

Is hardship the same as force majeure?

No. Hardship generally concerns severely burdensome performance, while force majeure commonly concerns obstacles affecting performance. Contract wording remains critical.

Can a court change the contract price?

Potentially, where the requirements for judicial adaptation are satisfied. Adaptation does not mean that the court automatically substitutes the current market price.

Can the contract be terminated instead?

Depending on the circumstances and inability to achieve appropriate adaptation, termination-related remedies may become relevant.

Should the supplier stop deliveries while seeking adaptation?

Not automatically. Unilateral suspension can itself constitute breach unless supported by the contract or applicable law.

What evidence is important?

The original contract, amendments, negotiations, supplier invoices, cost records, exchange-rate exposure, energy and freight expenses, market information and written renegotiation correspondence can all become important.

What should a company do first?

Review how the contract allocated price and market risks before demanding an increase or refusing performance. Then document precisely how the alleged extraordinary event changed the economics of the specific contract and pursue renegotiation, adaptation or other remedies through the mechanism permitted by the agreement and applicable law.

Client-Focused Legal Support for Long-Term Commercial Contract Disputes

Price escalation disputes can affect long-term supply agreements, distribution contracts, manufacturing arrangements, construction and industrial contracts, minimum-purchase commitments, guarantees and international commercial relationships. Fırat Fesih Kaya Law Office assists foreign companies, investors, suppliers and commercial counterparties in disputes involving price adjustment, hardship, excessive difficulty of performance, renegotiation, contract adaptation, termination and damages. Lawyer Fırat Fesih Kaya provides legal assistance in reviewing contractual risk allocation, preparing renegotiation and adaptation strategies, protecting parties against wrongful suspension or termination and representing clients in commercial dispute proceedings.

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+90 312 434 22 22

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+90 532 769 22 22

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