Impossibility of Performance and Termination of the Obligation: TBK m.136-137

Under TBK m.136/1, where the performance of an obligation becomes impossible for reasons for which the debtor is not responsible, the obligation is extinguished. Impossibility may be physical (e.g. destruction by natural disaster), legal (subsequent prohibition), personal (death of an artist) or economic — although economic difficulty is primarily addressed under the adaptation rule in TBK m.138.

Under m.136/2, counter-performance is normally returned and any unpaid counter-performance can no longer be claimed, subject to statutory or contractual risk-allocation exceptions. Failure promptly to notify impossibility and mitigate loss may give rise to damages under m.136/3. A debtor already in default is governed separately by m.119 and its defences.

If performance becomes partially impossible for reasons for which the debtor is not responsible, the debtor is released only from the impossible portion. However, if it is clear that the parties would not have concluded the contract had they foreseen the partial impossibility, the entire obligation is extinguished.

In synallagmatic contracts, where one party's obligation is partially impossible and the creditor accepts partial performance, the counter-performance is rendered in the same proportion. If the creditor refuses partial performance or the counter-performance is indivisible, the rules on full impossibility apply.

Where the debtor is responsible for the impediment, damages may be due despite actual performance being impossible (TBK m.112). Damages replacing performance generally protect the performance interest. Reliance damages require rescission or another appropriate legal basis; the two measures are not interchangeable without regard to their conditions.

Substitutionary damages represent the monetary value of the original performance. The calculation is based on the difference between the creditor's hypothetical asset position had performance occurred and the actual position resulting from non-performance.

Two frequently conflated concepts are impossibility of performance (TBK m.136) and hardship (TBK m.138). Impossibility is the objective inability to perform; hardship is the situation where, although technically still possible, performance cannot reasonably be expected of the debtor due to extraordinary changes in circumstances.

Impossibility extinguishes the obligation automatically; hardship requires the debtor to apply to the court for adaptation or, if adaptation is not possible, rescission. Correctly drawing this distinction directly affects the form of action and the available claims.

In contractual disputes, not only the signed text but also offer correspondence, revision history, invoices, delivery records, payment records, formal notices and the parties' subsequent conduct are taken into account. The formation, performance and termination of a contract often acquire meaning only through these ancillary documents.

Form requirements, authority of representation, penalty clauses, exclusion-of-liability provisions, standard terms and consumer-protection rules may all affect the validity or enforceability of a contract. For standard terms, the requirements of clear information, an opportunity to learn their content and acceptance under Article 21 of the Code of Obligations must be considered, together with any special consumer rules.

Before any dispute arises, the scope of obligations, delivery date, defect notice, default notice, interest and competent-court clauses should be drafted explicitly. Vague provisions may give rise to interpretation disputes and to difficulties of proof later on.