Newsletter-21

268 NEWSLETTER 2016 must choose between the two options, unless the primary obligation becomes impossible to fulfil due to a reason attributable to the debtor, in which case the creditor will be entitled to claim the penalty, only. On the other hand, the wording of Article 179/1 allows the parties to agree in the contact on the performance of both the obligation and the penalty. Penalty together with Performance As per Article 179/2 of the TCO, if the penalty has been agreed upon in cases where the obligation is unfulfilled by the determined time, or at the determined place, the creditor is, in principle, entitled to request non-performance of the penalty, together with the primary obligation, unless it has explicitly waived its right, or has accepted the performance without any reservations. For example, the 19th Civil Chamber of the Turkish Court of Cassation rendered a judgment in this regard, and stated that in the event of contracts containing a mini- mum order commitments, including periodic performances, continu- ing to supply products following the end of a period without making a reservation or a notification, shall be deemed as a tacit waiver of the penalty claim pertaining to the previous period 4 . Whereas it is also possible to agree on a penalty in lieu of perfor- mance, unless otherwise understood from the contract, the debtor is liable for both the performance (delayed or at the right place) and the penalty. Amount and Reduction of Penalty Whereas the parties are free to determine the penalty amount as per Article 182/1 of the TCO, Article 182/3 authorizes the court to ex officio reduce the amount if it deems it to be excessive. Although the court is entitled to decide whether or not to reduce the amount and determine the new amount, according to the Turkish Court of Cas- sation, “ whether or not the contractual penalty amount is excessive should be determined based on the economic status of the parties, specifically the payment capacity of the debtor, as well as the benefits 4 Turkish Court of Cassation 19th Civil Chamber, File No. 2014/3953, Decision No. 2014/7865, Date: 24.04.2014 (www.kazancı.com) .