The questions below offer a general framework on key provisions in commercial contracts, termination and rescission, contractual penalties, and types of contracts. In a specific case, time limits, documents and the regulations in force are assessed separately.
Showing 1–10 of 10 questions
Which provisions should be given priority when drafting a commercial contract?
The provisions on the parties, the performances, the price, the term, the performance and delivery criteria, security, breach and dispute resolution should be clear.
In commercial contracts, the price and a description of the work alone are not sufficient. The scope of the work, the delivery and acceptance procedure, the remedying of deficiencies, the payment schedule, sanctions for delay, confidentiality, intellectual property rights and the consequences of termination should be written in an enforceable manner. The parties’ powers of representation and the mandatory formal requirements should be checked in advance. Mandatory provisions of legislation and general terms and conditions may prevent every provision written into the contract from being treated as valid.
Can termination and compensation be considered together in the event of breach of contract?
Yes, but the conditions for termination, the basis of the compensation and the heads of loss that may be claimed must be examined separately.
The nature of the breach, whether a formal notice (ihtar) and an additional period are required, whether performance is still possible, and any special termination procedure provided for in the contract are important. Exercising a right of termination or rescission does not eliminate all claims for compensation in every case; however, the heads of loss that can be claimed may vary depending on the legal consequence chosen. Payments made, work delivered, the fate of the security and the nature of the contractual penalty should be assessed together.
What should be considered when drafting contractual penalty and security provisions?
Which breach gives rise to the contractual penalty and how the security will be used should be regulated in a manner that is specific, measurable and lawful.
A contractual penalty may have different consequences depending on whether there is delay, defective performance or no performance at all. For each of a letter of guarantee, suretyship, pledge, deposit or other forms of assurance, the conditions of validity and of realization differ. The relationship between the contractual penalty and actual loss or interest should be clearly regulated. Whether the debtor is a merchant, an objection that the penalty is excessive and the mandatory provisions that apply should also be researched separately.
Why does the difference between a lease, a service contract and a contract for work matter?
What is decisive is not the name of the contract but the nature of the principal performance and the special provisions that apply.
The ongoing provision of services, the granting of a right of use, or the bringing about of a specific result are subject to different regimes of obligations and liability. Claims relating to delivery, defects, termination and fees should be assessed according to the true legal nature of the contract.
Can the price of additional work not stated in the contract be claimed?
It may be possible, depending on the type of contract, the proof of the change and the parties’ agreement.
Records of order changes, correspondence, on-site examinations, progress payments (hakediş) and acceptance by conduct are decisive. In contracts subject to a formal requirement, the validity of an unwritten change must be examined separately.
Do rescission and termination have the same legal consequences?
No; rescission and termination may have different consequences for the ending and the settlement of the contractual relationship.
Continuing obligations and obligations with one-off performance, performances already rendered, and claims for compensation and restitution are assessed separately. The article on which the act relies, the content of the notice and the date on which it reached the other party must be established.
Does signing a contract in a foreign language remove its validity?
Not by itself; however, intent, interpretation and mandatory formal requirements are examined separately.
Which language version prevails, differences in translation, the applicable law and the notice procedure should be specified in the contract. Mandatory rules in consumer or employment relationships cannot be set aside by a choice of language in the contract.
Does a force majeure clause extinguish all payment obligations?
No; the definition of the event in the contract and its effect on the specific performance are assessed separately.
Force majeure, excessive difficulty of performance and impossibility are different legal institutions. The notice period, the affected performance, the causal link and the debtor’s duty to prevent the event must be examined.
If a commercial contract contains an arbitration clause, is it impossible to apply to court at all?
A valid arbitration agreement may require certain disputes to be taken to arbitrators; however, there are exceptions and court support.
The arbitrability of the dispute, the scope of the arbitration clause, interim relief and the avenues of recourse against an arbitral award should be distinguished. An arbitration clause does not automatically extend to every kind of dispute.
Is an unlimited exclusion-of-liability clause in a commercial contract valid?
Not every exclusion-of-liability clause is valid; gross negligence and mandatory provisions in particular impose limits.
The limits of an advance exclusion-of-liability agreement are examined under Article 115 of the Turkish Code of Obligations (TBK) and the relevant special provisions. The parties’ status as merchants, the principle of good faith and the conditions for the formation of the contract are also important.