Introduction
Commercial contracts form the legal backbone of business operations in Turkey. Whether involving supply agreements, distribution arrangements, construction contracts, service agreements, agency relationships, or cross-border transactions, commercial contracts determine the allocation of risk, rights, and obligations between parties.
Turkish contract law is primarily governed by the Turkish Code of Obligations (TCO), supported by the Turkish Commercial Code (TCC) for merchant-related matters. Turkish law generally recognizes freedom of contract; however, certain mandatory provisions and public policy rules limit contractual autonomy.
For foreign investors and multinational companies operating in Turkey, understanding commercial contracts under Turkish law is essential to ensure enforceability, risk management, and regulatory compliance.
This article provides a comprehensive overview of contract formation, validity, performance, breach, termination, force majeure, penalty clauses, and dispute resolution.
1. Legal Framework
Commercial contracts in Turkey are primarily regulated under:
- Turkish Code of Obligations No. 6098
- Turkish Commercial Code No. 6102
- Civil Code
- Sector-specific regulations
Turkish law follows a civil law system, meaning contractual principles are codified rather than based on precedent.
2. Freedom of Contract Principle
The fundamental principle is freedom of contract.
Parties are free to:
- Determine content
- Define obligations
- Allocate risks
- Choose governing law (in cross-border contracts)
However, contracts must not violate:
- Mandatory legal provisions
- Public order
- Morality
- Personal rights
Clauses contrary to mandatory law are invalid.
3. Essential Elements of a Valid Contract
For a contract to be valid under Turkish law, the following elements must exist:
1️⃣ Mutual consent
2️⃣ Legal capacity
3️⃣ Lawful subject matter
4️⃣ Compliance with required form (if any)
Absence of any element may render contract void or voidable.
4. Form Requirements
As a rule:
- Contracts do not require a specific form.
However, certain contracts require:
- Written form
- Notarization
- Official registration
Examples:
- Real estate sale contracts must be executed before land registry.
- Suretyship agreements require handwritten elements.
Failure to comply with mandatory form renders contract invalid.
5. Pre-Contractual Liability
Turkish law recognizes pre-contractual liability (culpa in contrahendo).
If a party:
- Acts in bad faith during negotiations
- Provides misleading information
- Abruptly terminates negotiations unfairly
They may be liable for damages.
Good faith is a fundamental principle.
6. Interpretation of Contracts
Contracts are interpreted based on:
- True intention of the parties
- Good faith principle
- Commercial practice
Ambiguities may be interpreted against the drafting party.
Written clarity is critical.
7. Performance of Obligations
Parties must perform obligations:
- Properly
- In good faith
- On time
If time is not specified, performance must occur within reasonable period.
Failure to perform may constitute breach.
8. Breach of Contract
Breach may arise from:
- Non-performance
- Late performance
- Defective performance
Consequences include:
- Compensation for damages
- Termination
- Specific performance
- Penalty clause enforcement
Damages must be foreseeable and directly linked to breach.
9. Default and Delay
If debtor fails to perform:
- Creditor may grant additional period.
- If performance still fails, creditor may terminate.
In certain cases, additional notice is not required.
Interest for late payment may apply.
10. Penalty Clauses
Penalty clauses are widely used in commercial contracts.
They serve to:
- Secure performance
- Pre-determine compensation
Turkish courts may reduce excessive penalties if deemed disproportionate.
Careful drafting is necessary.
11. Limitation of Liability Clauses
Parties may limit liability contractually.
However:
- Liability for gross negligence or intent cannot be excluded.
- Consumer contracts have stricter protections.
Commercial parties enjoy greater flexibility.
12. Force Majeure
Force majeure refers to:
- Unforeseeable
- Unavoidable
- Extraordinary events
Examples:
- Natural disasters
- War
- Government restrictions
COVID-19 highlighted importance of force majeure clauses.
If force majeure prevents performance:
- Liability may be eliminated.
- Contract may be suspended or terminated.
13. Hardship (Excessive Difficulty of Performance)
Under Turkish law, if circumstances change unexpectedly and:
- Performance becomes excessively burdensome
A party may request:
- Contract adaptation
- Judicial revision
- Termination
This doctrine is particularly relevant during economic crises.
14. Termination of Contracts
Contracts may terminate by:
- Mutual agreement
- Expiration of term
- Breach
- Impossibility of performance
Termination must follow contractual and statutory rules.
Improper termination may trigger compensation.
15. Commercial Contracts Between Merchants
If both parties are merchants:
- Commercial interest rates apply.
- Certain evidentiary rules differ.
- Notices may require formal methods.
Merchant status increases professional responsibility.
16. Assignment of Contracts
Contractual rights may generally be assigned.
Assignment requires:
- Written agreement
However, assignment of obligations requires counterparty consent.
Certain contracts prohibit assignment without approval.
17. Governing Law and Jurisdiction
In international contracts:
- Parties may choose governing law.
- Arbitration clauses are common.
Turkey recognizes foreign arbitral awards under New York Convention.
Choice-of-law clauses must not violate mandatory Turkish rules.
18. Electronic Contracts
Electronic contracts are valid under Turkish law.
Electronic signatures are legally recognized if:
- Secure electronic signature is used.
E-commerce contracts must comply with consumer protection laws.
19. Limitation Periods
General limitation period:
- 10 years
For commercial receivables:
- 5 years (in many cases)
Special limitation periods may apply depending on contract type.
20. Dispute Resolution Mechanisms
Commercial disputes may be resolved through:
- Turkish courts
- Arbitration
- Mediation
Mandatory mediation applies to:
- Commercial monetary claims
Arbitration is common in international transactions.
21. Common Risk Areas
Foreign investors should assess:
- Language discrepancies
- Mandatory Turkish law overrides
- Tax consequences
- Regulatory approvals
- Enforcement risks
Local legal review is strongly recommended.
Conclusion
Commercial contracts under Turkish law operate within a structured civil law framework emphasizing freedom of contract, good faith, and enforceability. While parties enjoy significant autonomy in defining their commercial relationship, mandatory provisions, public policy rules, and formal requirements must be respected.
For businesses operating in Turkey—especially foreign investors—clear drafting, careful risk allocation, and proper dispute resolution planning are essential for minimizing legal exposure and ensuring commercial certainty.
Well-structured commercial contracts not only protect against litigation but also serve as strategic tools for sustainable business operations in the Turkish market.
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