Control of Price Related Terms in Standard Form Contracts in Turkey: Judicial and Other Means of Price Control

Abstract

Turkish law, in accordance with the principle of freedom of contract, rarely interferes with price terms, as the price is a salient element of a contractual relation and therefore subject to competition in the market. This stance is acknowledged explicitly in the legal regime for standard form contracts where the Consumer Code excludes price terms from the unfairness analysis. However, as the findings of behavioural economics reveal, in many contractual settings, price terms could become incomprehensible to consumers and competition in market place may not produce desirable outcomes. This problem is exacerbated by the fact that firms, knowing the instances where consumers are prone to cognitive problems, are incentivised to utilise contracts in which price terms are obscured and complicated. Hence there is a valid ground for controlling price in standard form contracts when prices are non-salient. Turkish consumer law recognizes this problem and provides a provision, which enables courts to interfere with the prices terms when those terms are non-transparent, a condition which could be construed compatibly with the findings of behavioural sciences. However, Turkish judicial practice, which could be characterized as enthusiastic interventionist when it comes to price control, has ignored the transparency condition and employed its own criteria when controlling prices. Extensive and incoherent interference with prices has created enormous burden for judicial system and markets. Finally lawmaker has adopted explicit provisions in the Consumer Code and has chosen to solve the problem with regulation, which seems to be a better policy alternative.