Introduction
International supply agreements in Turkey are essential legal instruments for companies engaged in manufacturing, import-export, industrial production, construction, retail, energy, healthcare, food, automotive, machinery, textiles, electronics, technology and infrastructure projects. A supply agreement may appear simple: one party supplies goods, raw materials, components, equipment or products, and the other party pays the price. In practice, however, international supply relationships are legally complex because they combine contract law, commercial law, customs rules, product compliance, payment security, logistics, currency risk, force majeure, warranty obligations and dispute resolution.
Turkey is a major commercial bridge between Europe, Asia, the Middle East and North Africa. Turkish companies often purchase machinery, raw materials, chemicals, medical equipment, electronic components and industrial goods from foreign suppliers. Foreign companies also rely on Turkish manufacturers and exporters for textiles, automotive parts, construction materials, food products, furniture, machinery and consumer goods. These transactions frequently involve long-term supply commitments, framework agreements, purchase orders, Incoterms, technical specifications, letters of credit, bank guarantees, quality inspections and arbitration clauses.
A well-drafted international supply agreement protects both parties. The supplier wants payment security, predictable orders, limitation of liability and protection against unfair rejection of goods. The buyer wants timely delivery, quality assurance, product conformity, warranty remedies, protection against supply interruption and effective legal recourse if the supplier fails to perform. The contract must therefore define not only price and delivery, but also what happens when things go wrong.
International supply agreements involving Turkey may be governed by the United Nations Convention on Contracts for the International Sale of Goods, known as the CISG, Turkish Code of Obligations No. 6098, Turkish Commercial Code No. 6102, Law No. 5718 on International Private and Procedural Law, Turkish customs legislation, product safety rules, arbitration law and enforcement rules. Turkey is a CISG contracting state, and the Convention entered into force for Turkey on 1 August 2011.
1. What Is an International Supply Agreement?
An international supply agreement is a contract under which one party undertakes to supply goods, materials, components, equipment or products to another party across borders or within a transaction containing a foreign element. The contract may cover a single shipment, repeated deliveries, long-term supply, exclusive supply, OEM manufacturing, private label production, industrial inputs, spare parts or project-based procurement.
A supply agreement is different from a simple invoice or purchase order. It should regulate the commercial relationship comprehensively. In long-term supply relationships, the contract should address forecasts, minimum purchase quantities, lead times, rolling orders, stock obligations, production capacity, price adjustment, product changes, quality control, inspections, delivery terms, payment security, confidentiality and termination.
The foreign element may arise because one party is located outside Turkey, goods are shipped internationally, payment is made in foreign currency, delivery occurs through international carriers, customs clearance is required, or the applicable law and dispute resolution clause refer to a foreign jurisdiction or arbitration.
2. Legal Framework Applicable to Supply Agreements in Turkey
The legal framework depends on the nature of the goods, the parties and the governing law clause. If the agreement is an international sale of goods and the parties are located in CISG contracting states, the CISG may apply unless the parties exclude it. The CISG provides rules on contract formation, seller’s obligations, buyer’s obligations, conformity of goods, remedies, damages and exemption from liability.
Where the CISG does not apply or does not regulate a specific issue, Turkish domestic law may become relevant. The Turkish Code of Obligations governs general contract law, sale contracts, default, damages, termination, defect liability and contractual obligations. Under Turkish law, a contract is established by mutual and corresponding declarations of intent, whether explicit or implicit.
The Turkish Commercial Code is also relevant where the parties are merchants or where the transaction concerns a commercial enterprise. Article 1 of the Turkish Commercial Code provides that provisions in the Code and special provisions concerning commercial enterprises are commercial provisions, and that courts decide commercial matters according to commercial customs and general provisions where no commercial provision exists.
For supply agreements with a foreign element, Turkish private international law also matters. Article 24 of Law No. 5718 provides that contractual obligations are subject to the law expressly chosen by the parties, and that a choice of law clearly understood from the contract or circumstances is also valid.
3. CISG and Turkish Supply Agreements
The CISG is highly important in international supply agreements involving Turkey. Many parties write “Turkish law shall apply” and assume that only Turkish domestic law applies. This assumption can be wrong. If the contract is an international sale of goods and the CISG conditions are met, the CISG may form part of the applicable legal framework unless excluded.
For supply contracts, the CISG may regulate the seller’s duty to deliver conforming goods, the buyer’s duty to pay and take delivery, notice of non-conformity, remedies for breach, damages, avoidance and exemption from liability. This is especially important for machinery supply, raw material sales, textile exports, industrial components, food products and construction materials.
If the parties do not want the CISG to apply, the agreement should expressly state:
“The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.”
If the parties want the CISG to apply, the agreement should still identify the national law governing issues not covered by the CISG. For example:
“This Agreement shall be governed by the CISG. Matters not governed by the CISG shall be governed by the laws of the Republic of Türkiye.”
This avoids uncertainty and reduces disputes over applicable law.
4. Framework Agreements and Purchase Orders
Many supply relationships operate through a framework agreement and separate purchase orders. The framework agreement sets general rules, while purchase orders specify quantities, delivery dates, product codes and prices. This structure is practical, but it creates hierarchy problems if documents conflict.
For example, the framework agreement may provide Turkish law and ISTAC arbitration, while the supplier’s general terms on the invoice may provide English law and London courts. The buyer’s purchase order may contain different payment terms. If document hierarchy is unclear, the parties may later dispute which terms prevail.
A strong supply agreement should state that the framework agreement prevails over purchase orders, invoices, delivery notes and general terms unless the parties expressly agree otherwise in writing. It should also prohibit unilateral alteration of key terms through invoice terms or order confirmations.
5. Product Specifications and Quality Standards
Product description is one of the most important parts of any supply agreement. The contract should identify product codes, technical specifications, quantity, quality standards, tolerances, packaging, labeling, certificates, manuals, expiry dates, shelf life, regulatory standards and testing requirements.
Under Turkish defect rules, the seller may be liable where the sold goods do not conform to announced qualities, agreed characteristics, descriptions, packaging or other features. Legal commentary on Article 219 of the Turkish Code of Obligations describes defect liability as covering non-conformity with qualities, type, quantity, measurements, packaging or descriptions announced by the seller.
In international supply disputes, vague specifications create serious risk. A buyer may claim that goods are defective because they are unsuitable for a specific production line, while the supplier may argue that they meet the written description. To avoid this, technical schedules, drawings, test standards and acceptance criteria should be attached to the contract.
6. Delivery Terms, Incoterms and Risk Transfer
Delivery obligations must be drafted with precision. The contract should define the delivery place, delivery time, transport method, carrier responsibility, export clearance, import clearance, customs duties, insurance, loading, unloading and transfer of risk.
Incoterms are widely used in international supply contracts. The ICC describes Incoterms rules as eleven three-letter trade terms reflecting business-to-business practice in contracts for the sale and purchase of goods.
However, Incoterms must be used correctly. The contract should not simply state “FOB Turkey” or “CIF Istanbul.” It should specify the exact rule, named place and version, such as:
“DAP Buyer’s warehouse, Istanbul, Türkiye, Incoterms 2020.”
Incoterms do not replace the entire contract. They do not fully regulate payment, title transfer, inspection, defect remedies, force majeure, dispute resolution, product compliance or customs penalties. Therefore, Incoterms should be supported by detailed contractual provisions.
7. Import, Export and Customs Documentation
International supply agreements involving Turkey often require customs documentation. Commercial shipments to Turkey generally require a commercial invoice, bill of lading or airway bill, packing list and certificate of origin; depending on the product’s harmonized tariff code, additional documents such as control certificates, health certificates, phytosanitary certificates or veterinary certificates may also be necessary.
The supply agreement should allocate responsibility for customs documents, origin certificates, A.TR or EUR.1 documents, conformity certificates, product safety documents, import permits, export permits, customs broker fees, storage, demurrage and customs penalties.
A common dispute occurs when the buyer cannot clear goods through Turkish customs because the supplier provided incomplete certificates or incorrect origin information. Another common dispute occurs when the seller delivers goods on time, but the buyer fails to obtain import permits. The contract should clearly identify which party bears each risk.
8. Inspection, Acceptance and Defective Goods
Inspection and acceptance clauses are critical in supply agreements. The buyer should inspect goods within a defined period and notify the supplier of visible defects, quantity shortages or non-conformity. Hidden defects should be subject to a separate notice period after discovery.
The contract should define:
When inspection takes place.
Where inspection takes place.
Who performs inspection.
Whether third-party inspection is binding.
What documents are required.
Whether signing a delivery note means acceptance.
How hidden defects are handled.
What remedies apply for rejected goods.
Whether the supplier has a right to cure.
For international buyers, it is important not to confuse physical receipt with legal acceptance. A warehouse employee may sign a delivery note merely to confirm receipt, while the buyer later discovers defects. The contract should state whether receipt documents confirm only delivery or also conformity.
9. Supplier’s Remedies for Buyer Breach
The supplier’s main risk is non-payment. Buyer breach may also include failure to open a letter of credit, refusal to take delivery, unjustified rejection of goods, failure to provide import documents, breach of minimum purchase obligations or cancellation of orders after production.
Supplier remedies should include:
Claim for payment.
Default interest.
Suspension of further deliveries.
Retention of documents.
Termination of future supply.
Recovery of storage and demurrage costs.
Resale of goods where appropriate.
Damages for cancelled orders.
Use of bank guarantee or letter of credit.
A supplier should not continue supplying goods indefinitely to a buyer with unpaid overdue invoices. The agreement should include credit limits and the right to suspend deliveries if outstanding debt exceeds the agreed limit.
10. Buyer’s Remedies for Supplier Breach
The buyer’s main risks are late delivery, defective goods, incomplete delivery, wrong product, counterfeit or non-compliant goods, lack of spare parts, warranty breach and supply interruption.
Buyer remedies may include:
Replacement of defective goods.
Repair.
Price reduction.
Rejection of non-conforming goods.
Damages.
Termination.
Cover purchase from another supplier.
Recovery of extra logistics or production costs.
Calling performance or warranty guarantees.
The buyer should document defects carefully through photographs, videos, laboratory tests, expert reports, customer complaints, production records and written notices. In technical supply disputes, evidence created immediately after delivery is often decisive.
11. Payment Security in International Supply Agreements
Payment security should be addressed before performance begins. Depending on the transaction, the parties may use advance payment, confirmed letter of credit, bank guarantee, escrow, promissory note, parent company guarantee, credit insurance, retention of title, movable pledge or installment security.
For high-value international supply, letters of credit can protect the supplier by linking payment to presentation of compliant shipping documents. Bank guarantees can protect the buyer where advance payment is made or protect the supplier where payment is deferred.
The agreement should define who provides security, when it must be provided, which bank is acceptable, the amount, currency, expiry date, demand conditions and consequences of failure to provide security. A payment security clause without precise deadlines and consequences may be ineffective.
12. Price Adjustment and Currency Risk
International supply agreements are exposed to currency fluctuation, inflation, raw material price increases, energy costs, freight costs and customs duties. Long-term contracts should not leave these risks unresolved.
The contract should define whether prices are fixed or adjustable. If adjustable, it should identify the adjustment formula, index, trigger threshold, review period and documentation. For example, a contract may allow price revision if steel, oil, polymer or freight costs increase beyond a defined percentage.
Currency clauses are also important. The contract should state the payment currency, whether Turkish lira conversion is allowed, which exchange rate applies, which date controls conversion and whether exchange rate losses are recoverable.
13. Minimum Purchase, Forecasts and Supply Commitments
Long-term supply agreements often include forecasts, minimum purchase quantities or supply capacity commitments. These provisions must be drafted carefully.
A forecast may be binding or non-binding. A minimum purchase obligation may apply monthly, quarterly or annually. A supplier may commit to reserve production capacity, but only if the buyer provides rolling forecasts and purchase orders within agreed deadlines.
The contract should define what happens if the buyer fails to meet minimum quantities. Possible consequences include loss of exclusivity, price increase, termination, reimbursement of reserved capacity costs or damages. If the supplier fails to meet supply commitments, the buyer may seek cover purchase costs or termination.
14. Force Majeure and Supply Chain Disruption
Supply contracts are vulnerable to war, sanctions, earthquakes, pandemics, port closures, export bans, customs restrictions, transport disruption, energy shortages, cyberattacks and supplier insolvency.
A force majeure clause should define covered events, notice duties, evidence, mitigation, suspension of obligations, alternative sourcing, extension of time, cost allocation and termination if the event continues beyond a defined period.
Force majeure should not be used as a vague excuse for ordinary commercial difficulty. If performance is still possible but significantly more expensive, hardship or price adjustment may be more relevant. Therefore, international supply agreements should include both force majeure and hardship clauses.
15. Hardship and Excessive Difficulty of Performance
Hardship arises where performance remains possible but becomes excessively burdensome due to extraordinary and unforeseeable circumstances. Under Turkish law, hardship may support adaptation of the contract under strict conditions, especially where extraordinary events fundamentally disrupt the contractual balance.
In long-term supply agreements, hardship clauses are particularly important. They may address extraordinary increases in raw material costs, currency collapse, sanctions, transport cost explosions, regulatory changes or supply chain breakdowns.
A well-drafted hardship clause should require written notice, supporting documents, good-faith renegotiation, temporary continuation of performance, expert determination or court/arbitral adaptation, and termination if adaptation fails.
16. Product Compliance, Safety and Regulatory Risk
Supplied goods must comply not only with the contract but also with applicable regulatory standards. Products imported into Turkey may be subject to product safety controls, CE marking, technical regulations, labeling, certificates, testing and sector-specific approvals.
The contract should allocate responsibility for product compliance. The supplier may be responsible for technical documents, declarations of conformity, test reports and certificates. The buyer may be responsible for local import permits, customs clearance and regulatory filings. In regulated sectors such as medical devices, food, cosmetics, chemicals, electrical equipment and machinery, these duties must be detailed.
If non-compliant goods are supplied, the buyer may face customs delays, administrative penalties, market withdrawal or customer claims. The contract should include indemnity provisions for regulatory non-compliance caused by the supplier’s documents or product defects.
17. Confidentiality, Tooling and Intellectual Property
Supply relationships often involve confidential information. The buyer may provide technical drawings, molds, formulas, designs, product specifications or customer requirements. The supplier may provide know-how, production methods or cost data.
The agreement should protect:
Technical drawings.
Molds and tooling.
Product designs.
Manufacturing know-how.
Customer data.
Pricing.
Quality reports.
Production methods.
Software or firmware.
Private label materials.
If tooling is paid for by the buyer, the contract should state who owns it, where it is stored, whether it may be used for other customers, how it is maintained and what happens after termination. Without a tooling clause, disputes may arise when the buyer wants to move production to another supplier.
18. Limitation of Liability and Indemnity
Suppliers often seek to limit liability to the contract price or the value of defective goods. Buyers often seek broad recovery for production stoppage, recall costs, third-party claims, customer penalties and lost profit.
The contract should distinguish between direct damages, indirect damages, consequential losses, recall costs, product liability claims, IP infringement, confidentiality breach, fraud, gross negligence and regulatory penalties.
A balanced limitation clause may cap ordinary commercial liability but exclude certain serious breaches from the cap, such as intentional misconduct, gross negligence, IP infringement, confidentiality breach, product safety violations or unpaid purchase price.
19. Termination of Supply Agreements
Termination provisions should be precise. The agreement should distinguish between termination for cause, termination for convenience, termination due to prolonged force majeure, termination for insolvency, termination for repeated late delivery, termination for non-payment and termination for regulatory non-compliance.
The contract should regulate post-termination consequences:
Outstanding purchase orders.
Work in progress.
Raw material inventory.
Tooling return.
Confidential information.
Final payments.
Warranty obligations.
Remaining stock.
Transition supply.
Customer communication.
A buyer may need transition supply to avoid production stoppage. A supplier may need payment for raw materials purchased specifically for the buyer. These issues should be anticipated.
20. Dispute Resolution: Turkish Courts or Arbitration
Supply disputes may be resolved before Turkish courts, foreign courts or arbitral tribunals depending on the contract. Where the buyer, goods, customs documents or assets are in Turkey, Turkish courts may be practical. Where the contract is high-value and international, arbitration may provide neutrality and enforceability.
ISTAC provides a model arbitration clause stating that disputes arising out of or in connection with the contract shall be finally settled through arbitration under the Istanbul Arbitration Centre Arbitration Rules.
If enforcement abroad is likely, arbitration may be attractive because foreign arbitral awards can benefit from the New York Convention. Turkey has made reciprocity and commercial reservations under the New York Convention.
The dispute resolution clause should not conflict with the governing law clause. It should specify institution, seat, language, number of arbitrators, interim measures and enforcement strategy.
21. Evidence in Supply Disputes
Supply disputes are evidence-driven. The parties should preserve:
Signed agreement.
Purchase orders.
Order confirmations.
Invoices.
Packing lists.
Bills of lading.
Airway bills.
Customs declarations.
Certificates of origin.
Inspection reports.
Quality control reports.
Photos and videos.
Email correspondence.
WhatsApp messages.
Payment records.
Defect notices.
Expert reports.
Production stoppage records.
Foreign-language documents may need certified Turkish translation in Turkish court proceedings. If documents are official foreign documents, apostille or legalization may be required depending on use.
22. Practical Drafting Checklist
A strong international supply agreement involving Turkey should include:
Detailed product specifications.
Document hierarchy clause.
CISG inclusion or exclusion.
Governing law clause.
Incoterms 2020 wording.
Delivery schedule.
Inspection and acceptance procedure.
Defect notice rules.
Payment terms.
Payment security.
Currency and exchange rate clause.
Customs documentation duties.
Product compliance obligations.
Force majeure clause.
Hardship clause.
Confidentiality and tooling clauses.
Limitation of liability.
Termination rights.
Post-termination obligations.
Dispute resolution clause.
Evidence and notice rules.
This checklist should be adapted to each sector. A chemical supply contract, textile supply contract, machinery supply agreement, food supply agreement and medical equipment supply agreement do not carry the same risks.
Conclusion
International supply agreements in Turkey require careful legal planning because they combine cross-border sale of goods, Turkish commercial law, CISG, customs rules, payment security, product compliance and dispute resolution. A supply contract should not be treated as a simple order form. It should be a complete risk allocation document covering product specifications, delivery, risk transfer, inspection, payment, defects, force majeure, hardship, termination and remedies.
For suppliers, the main risks are non-payment, unjustified rejection, excessive liability, buyer insolvency and unclear order commitments. For buyers, the main risks are defective goods, late delivery, supply interruption, regulatory non-compliance, customs problems and lack of effective remedies. Both parties should document their obligations clearly and preserve evidence throughout performance.
The strongest legal protection is created before the first shipment. A well-drafted supply agreement can prevent disputes, support negotiation, improve payment security and strengthen enforcement if litigation or arbitration becomes necessary. In Turkey-related international trade, clarity in contract drafting often determines the difference between commercial success and prolonged legal conflict.
Frequently Asked Questions
Does the CISG apply to international supply agreements in Turkey?
Yes, the CISG may apply to international sale of goods contracts involving Turkish parties where the Convention’s requirements are met, unless the parties expressly exclude it. Turkey has been bound by the CISG since 1 August 2011.
Should the CISG be excluded in a Turkish supply agreement?
It depends on the transaction. The CISG may provide a balanced international framework, but some parties prefer Turkish domestic law or another national law. The contract should expressly state whether the CISG applies or is excluded.
What should an international supply agreement include?
It should include product specifications, price, currency, payment terms, Incoterms, delivery schedule, customs documents, inspection procedure, defect remedies, warranties, force majeure, hardship, termination, governing law and dispute resolution.
Are Incoterms enough to regulate delivery?
No. Incoterms are useful for delivery, cost and risk allocation, but they do not fully regulate payment, inspection, product defects, title transfer, customs penalties or dispute resolution.
What documents are usually needed for imports into Turkey?
Commercial shipments generally require a commercial invoice, bill of lading or airway bill, packing list and certificate of origin, with additional product-specific documents depending on the tariff code.
What remedies does a buyer have for defective goods?
Depending on the contract, CISG and applicable law, the buyer may request replacement, repair, price reduction, damages, rejection, termination or other remedies. Timely notice and evidence are critical.
What remedies does a supplier have if the buyer does not pay?
The supplier may claim payment, default interest, damages, suspend deliveries, terminate the agreement, rely on payment security or initiate enforcement, litigation or arbitration depending on the contract.
Can supply disputes be arbitrated in Turkey?
Yes. International supply disputes can be referred to arbitration if the parties have a valid arbitration clause. ISTAC arbitration is one Turkey-based option for commercial disputes.
What is the biggest risk in international supply agreements?
The biggest risks are vague product specifications, unclear delivery terms, weak payment security, missing customs documents, poor defect notice procedures, inadequate force majeure clauses and inconsistent purchase order terms.
How can companies reduce supply contract disputes in Turkey?
They should use clear written contracts, define document hierarchy, verify signatory authority, include detailed specifications, align Incoterms with customs duties, secure payment, preserve evidence and choose a coherent dispute resolution mechanism.
Yanıt yok