Introduction
Commercial contracts constitute the backbone of economic life. In Turkey, commercial activities are largely shaped by contractual relationships between merchants, companies, and investors. Whether it involves supply agreements, distribution contracts, service arrangements, or joint ventures, commercial contracts play a decisive role in regulating rights and obligations between parties.
Under Turkish law, commercial contracts are governed by a combination of general contract law principles and specific rules applicable to commercial transactions. Understanding this legal framework is particularly important for foreign investors and international businesses operating in Turkey, as contractual freedom exists alongside mandatory legal limitations.
This article provides a comprehensive analysis of commercial contracts under Turkish law, focusing on their legal basis, formation, types, interpretation, breach, and termination.
Legal Framework of Commercial Contracts in Turkey
Commercial contracts in Turkey are primarily regulated by:
• The Turkish Code of Obligations
• The Turkish Commercial Code
• Relevant special laws and regulations
The Turkish Code of Obligations establishes the general principles applicable to all contracts, while the Turkish Commercial Code introduces additional rules for contracts involving merchants and commercial enterprises.
In cases where both parties qualify as merchants, commercial law provisions take precedence.
Concept of Commercial Contract
A commercial contract is an agreement concluded for the purpose of carrying out commercial activities. These contracts typically involve:
• Merchants
• Commercial companies
• Business entities
• Professional traders
Commercial contracts are distinguished from ordinary contracts by their connection to trade, profit-oriented activities, and professional engagement.
Principle of Freedom of Contract
Turkish law recognizes the freedom of contract as a fundamental principle. Parties are free to:
• Decide whether to conclude a contract
• Determine its content
• Choose the form of the contract
• Select governing law, within legal limits
However, this freedom is not absolute. Mandatory provisions, public order, and good faith principles limit contractual autonomy.
Formation of Commercial Contracts
A commercial contract is formed through:
• Mutual and corresponding declarations of intent
• Agreement on essential elements
• Legal capacity of the parties
As a general rule, no specific form is required unless mandated by law. Commercial contracts may be concluded:
• In writing
• Orally
• Electronically
Nevertheless, written contracts are strongly recommended for evidentiary purposes.
Essential Elements of Commercial Contracts
For a commercial contract to be valid, it must include:
• Parties with legal capacity
• Subject matter that is lawful and possible
• Mutual consent
• Consideration or economic purpose
Contracts lacking these elements may be deemed invalid or unenforceable.
Types of Commercial Contracts under Turkish Law
Turkish law recognizes various types of commercial contracts, including but not limited to:
• Sale of goods contracts
• Supply agreements
• Distribution and dealership agreements
• Franchise contracts
• Agency contracts
• Service agreements
• Construction contracts
• Joint venture agreements
Many commercial contracts are not explicitly regulated by statute and are governed by general contract principles.
Interpretation of Commercial Contracts
Commercial contracts are interpreted according to:
• The true and common intention of the parties
• The principle of good faith
• Commercial customs and practices
In commercial relationships, courts place greater emphasis on professional standards and industry practices.
Obligations of the Parties
Commercial contracts typically impose:
• Performance obligations
• Payment obligations
• Confidentiality duties
• Non-compete obligations
• Information and cooperation duties
Failure to perform contractual obligations may give rise to liability.
Breach of Commercial Contracts
A breach occurs when a party:
• Fails to perform
• Performs improperly
• Delays performance
Under Turkish law, breach may result in:
• Compensation for damages
• Termination of the contract
• Specific performance
• Reduction of price
• Penalty clauses
The nature of the breach determines the available remedies.
Liability and Damages
Damages aim to place the injured party in the position they would have been in had the contract been properly performed.
Recoverable damages may include:
• Actual loss
• Loss of profit
• Consequential damages
Liability may be limited or expanded through contractual clauses, subject to legal restrictions.
Penalty Clauses and Liquidated Damages
Penalty clauses are commonly used in commercial contracts to secure performance.
Turkish courts may reduce excessive penalty clauses if they are deemed disproportionate. This judicial intervention reflects the balance between contractual freedom and fairness.
Force Majeure and Hardship
Commercial contracts often include force majeure clauses.
Under Turkish law:
• Force majeure excuses performance when unforeseeable and unavoidable events occur
• Hardship allows adaptation or termination of contracts when performance becomes excessively burdensome
These doctrines play a crucial role in long-term commercial agreements.
Termination of Commercial Contracts
Commercial contracts may be terminated through:
• Performance
• Mutual agreement
• Expiry of term
• Breach
• Just cause
Termination consequences must be carefully regulated to avoid disputes.
Unfair Contract Terms and Mandatory Rules
Certain contractual terms may be invalid if they:
• Violate mandatory legal provisions
• Contradict public order
• Infringe the principle of good faith
In some cases, unfair terms may be partially invalidated while the rest of the contract remains in force.
Dispute Resolution in Commercial Contracts
Commercial contracts frequently include dispute resolution clauses such as:
• Jurisdiction clauses
• Arbitration agreements
• Mediation clauses
Turkish law recognizes party autonomy in selecting dispute resolution mechanisms, particularly in commercial matters.
International Commercial Contracts
For international contracts involving Turkey:
• Choice of law clauses are generally respected
• Turkish mandatory rules may still apply
• Recognition and enforcement of foreign judgments become relevant
Careful drafting is essential to ensure enforceability.
Importance of Professional Contract Drafting
Commercial contracts should not rely on templates or informal arrangements.
Professional drafting ensures:
• Legal clarity
• Risk allocation
• Enforceability
• Compliance with Turkish law
For foreign parties, legal advice is especially important to avoid unintended consequences.
Conclusion
Commercial contracts under Turkish law operate within a framework that balances contractual freedom with legal certainty and fairness. While parties enjoy broad autonomy, they must also comply with mandatory rules and good faith principles.
For businesses and investors, well-drafted commercial contracts are essential tools for managing risk and ensuring sustainable commercial relationships. Understanding the legal principles governing commercial contracts in Turkey is therefore indispensable for successful business operations.
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