Under a donation contract the donor undertakes to confer a benefit on the donee without consideration. The absence of any consideration for that benefit makes the contract a relationship imposing obligations on one party alone, and at the same time constitutes the characteristic feature of this contract type. Since the donor will obtain no performance in return for the benefit conferred, the law has adopted strict criteria as regards capacity in order to protect him: only persons with full capacity to act may hold the status of donor. The same protective consideration has also lightened the liability of the donor arising from non-performance.
That the contract imposes obligations on one party alone does not prevent the donor from stipulating certain charges. Where such a charge is agreed, the relationship does not turn into a contract imposing obligations on both parties, because the charge is framed not as consideration for the donation but as an ancillary performance. It is also possible to attach a condition to a donation. One such condition is the condition of reversion to the donor; under this type it is agreed that the item of property donated will revert to the donor if the donee dies before the donor.
Elements of the Donation Contract
The Existence of a Transaction Conferring a Benefit
By way of donation, a benefit is conferred on the donee. That benefit may appear in two forms: an increase in the assets of the estate, or a reduction in its liabilities. Transferring a vehicle to the donee is an example of the first possibility, while assuming an existing debt of his is an example of the second.
It is not sufficient that the benefit enlarge the assets of the donee; it must also bring about a diminution in the assets of the donor. For this reason, waiving a right that has not yet been acquired, or renouncing an inheritance, does not count as a donation. Nor is the performance of a moral duty characterised as a donation. What the cases listed have in common is that no diminution occurs in the assets of the donor.
The Benefit Must Be Gratuitous
Gratuitousness is the criterion that distinguishes donation from other contract types. In relationships such as sale and barter, ownership likewise changes hands; there, however, the transfer takes place in return for obtaining a specified consideration.
The only thing required in a donation is that the benefit be conferred without consideration being received; the motive of the donor in carrying out the transaction is of no legal significance.
Agreement of the Intentions of the Parties
For the contract to be validly formed, the intention of the donor to transfer ownership of the value forming the subject of the contract to the donee without consideration must coincide with the intention of the donee to accept. The declaration of acceptance may be express, and it may equally be implied. Beginning to use the thing donated is an example that may be given of implied acceptance.
Capacity in the Donation Contract
Because of the structure of the contract, the requirements of capacity differ from one party to the other; the subject must therefore be examined separately in respect of the donor and the donee.
The Capacity of the Donor
Since the donor will obtain no consideration, his assets will diminish. In order to protect him, the legislature has provided that only persons with full capacity to act may stand on the donor’s side of the contract. Persons who have the capacity of discernment, are of full age and are not subject to legal restriction have full capacity to act; they may therefore hold the status of donor.
Persons who do not have full capacity to act cannot be donors. The general rule on capacity is that such persons carry out their legal transactions through their legal representatives. Even so, the Turkish Civil Code No. 4721 has provided, in order to protect those persons, that certain transactions may not be carried out even through a legal representative. The donation contract is among this group, referred to as prohibited transactions. That prohibition does not, however, extend to donations so small as to be of no significance; benefits of that nature may be conferred by persons without full capacity with the consent of their legal representative.
Pursuant to Turkish Code of Obligations No. 6098 Art. 286, certain donations made by persons with full capacity are capable of annulment. When the contract is being formed, the provisions of the law of succession and the limitations arising from the matrimonial property regime between spouses must first be taken into account. Pursuant to Turkish Civil Code No. 4721 Art. 229, gratuitous benefits conferred by one spouse without obtaining the consent of the other in the one-year period preceding the termination of the matrimonial property regime are, with the exception of customary gifts, added in value to the acquired property. Turkish Civil Code No. 4721 Art. 565, for its part, makes subject to abatement those donations the deceased made while freely reserving the right of withdrawal; the distinction between gifts given in accordance with custom within the year preceding death and donations that are not of that nature is decisive here. A further limitation appears in Turkish Code of Obligations No. 6098 Art. 286(2): if, as the result of proceedings commenced within one year following the donation, the donor is placed under legal restriction on the ground of prodigality, the donation may be annulled by the court.
The Capacity of the Donee
Since the assets of the person in whose favour the donation is made will increase, the legislature has not seen a need for protection as strict in respect of the donee as in respect of the donor. For this reason it has been regarded as sufficient that the donee have the capacity of discernment. A donee who has the capacity of discernment may accept the benefit without even needing the approval of his legal representative.
Pursuant to Turkish Code of Obligations No. 6098 Art. 287, the donation lapses if the legal representative of the donee prohibits acceptance or orders the return of the thing donated. The legislature laid down this provision for cases in which the donation is abused or is not of an acceptable character from a moral point of view.
Types of Donation Contract
Promise of Donation
Where the donor gives a promise of donation, the obligation is not performed at the moment the contract is formed. This contract gives rise to an obligation to give on the part of the donor.
The validity of a contract promising a donation relating to movable property is subject to written form. For a promise to donate an immovable, or a right in rem over an immovable, to be valid, it must be made in official form. The authority that will satisfy the requirement of official form is the Land Registry Directorate.
The law has also regulated the fate of a promise of donation formed in breach of the required form. Accordingly, a promise of donation that is invalid for non-compliance with form is deemed a hand-to-hand donation where it is performed by the donor. That rule does not operate, however, in donations whose validity is made subject to official form; a contract made without complying with the form is regarded as invalid.
Hand-to-Hand Donation
The formation of a hand-to-hand donation is made dependent on delivery:
Turkish Code of Obligations No. 6098, Art. 289
“A hand-to-hand donation is formed by the donor delivering a movable of his to the donee.”
The subject of the donation is given to the donee at the moment the contract is made; no requirement of form is sought, delivery on its own being sufficient. Since the transfer of immovables takes place by way of registration in the land registry, immovables cannot be made the subject of a hand-to-hand donation. This route may therefore be taken only in respect of movables and rights of a personal nature.
Conditional Donation
The law has also provided that a donation may be made subject to a condition. In that event, the taking effect or the ending of the contract is made dependent on an event as to which it is uncertain whether it will occur in the future. As a rule, both a condition precedent and a condition subsequent may be agreed.
If a condition contrary to law or to morality has been stipulated, the contract becomes invalid in its entirety. Where fulfilment of the condition agreed is impossible, the result is determined according to the type of condition: in the case of a condition precedent the contract is regarded as wholly invalid, whereas in the case of a condition subsequent the contract is accepted as wholly valid.
Donation with a Charge
Although the gratuitous character of the donation is the basic rule, the donor may attach to the benefit conferred certain charges on the part of the donee. The presence of a charge in the contract does not turn the relationship into a fully synallagmatic contract, since the charge has not been stipulated as a performance constituting the consideration for the donation. The charge is in the nature of an ancillary performance and is subject to the following principles:
- The person to whom the charge is owed may be the donor directly, and may equally be designated as a third party who is not a party to the contract.
- It is also possible to stipulate in the contract an obligation serving the public interest.
- Where a charge has been agreed, the donor may demand performance of the obligation assumed by the donee.
- A charge may be framed as an obligation to give, to do or to refrain from doing; its content must be compatible with Turkish Code of Obligations No. 6098 Art. 27, that is to say it must not run counter to the mandatory provisions of the law, to morality, to public order or to personality rights, and its performance must be possible.
Donation Whose Performance Depends on the Death of the Donor
Under this type it is agreed that the subject of the donation will pass to the donee after the death of the donor. In essence there is a contract promising a donation here as well; the difference lies in the time of performance having been left to a point after the moment of the donor’s death.
Turkish Code of Obligations No. 6098 Art. 290(2) states that the provisions concerning wills apply to this type of donation. What the law means is that the provisions of the law of succession come into play. Since the donation is a contract, the provisions concerning the contract of inheritance must be applied here. As a consequence, this contract must be made in accordance with the requirements of form sought for an official will.
Donation Subject to Reversion to the Donor
The donor may, against the possibility that the donee dies before him, stipulate a condition to the effect that the item of property forming the subject of the benefit shall revert to him. As its name indicates, this contract is subject to a condition; the condition agreed is that the donee should die before the donor.
This type of donation is not subject to a requirement of form as regards movables. As regards immovables, the contract must be formed in official form before the land registry.
Our note headed Withdrawal from a Donation may be consulted on this subject.
Withdrawal of an Offer of Donation
Turkish Code of Obligations No. 6098 Art. 293 grants the donor broad freedom at the offer stage. Accordingly, a person may withdraw his offer until the donee accepts it, even if he has in fact set the property he has offered to donate apart from his other property.
The Obligations of the Donor
The donor is under an obligation to transfer possession and ownership of the thing forming the subject of the donation to the donee.
Where that obligation is not performed, an action for performance may be brought. If the subject of the donation is an immovable, recourse may be had to an action for registration pursuant to Turkish Civil Code No. 4721 Art. 716.
The parties may also agree that the donation be performed at specified intervals. In such a case, unless otherwise agreed, the donation comes to an end upon the death of the donor.
The Liability of the Donor
Because the donor performs without receiving any consideration, the law has lightened his liability by comparison with debtors under other contract types.
In pecuniary obligations, interest must as a rule be calculated from the moment default occurs. In a donation, by contrast, interest begins to run only from the date on which an action for performance has been brought or enforcement proceedings have been commenced. A later date is thus taken as the basis than under the general rule.
Where loss has arisen through the non-performance of the obligation flowing from the donation contract, the donor is held liable for it only where there is gross fault or intent on his part.
The law further states that, where the donor has given a warranty in respect of the thing donated or of the claim donated, he will be liable accordingly. For this reason the liability of the donor for dispossession and for defects depends on his having expressly assumed it.
Independent Legal Assessment
Although the donation is on the face of it one of the simplest contract types, in practice it is among the relationships that give rise to the greatest number of disputes over invalidity and annulment. The reason is that, although the transaction is most often established in the context of family relationships and the planning of an estate, the limitations flowing from the matrimonial property regime and from the law of succession are overlooked. The dispute, too, generally arises not at the moment the contract is formed but years later, when abatement or the participation claim is being calculated. A donation must therefore be passed, at the date it is made, through the filter not only of the law of obligations but of the law of succession and family law as well.
When a concrete donation is being planned, we have regard to the following headings:
- Determining whether the subject of the donation is movable or immovable and choosing written or official form accordingly
- Documenting at the time of the transaction that the donor has full capacity to act
- Assessing the one-year periods preceding the termination of the matrimonial property regime and preceding death in the light of Turkish Civil Code No. 4721 Arts. 229 and 565
- Where a charge is to be stipulated, setting out its content expressly so that it remains within the limits of Turkish Code of Obligations No. 6098 Art. 27, and, where performance dependent on death is agreed, complying with the requirements of form for an official will
Independent Legal provides advisory and litigation services ranging from the drafting of donation contracts to the conduct of the annulment, abatement and registration disputes arising from them.