Law of Contracts in Turkey
Key Aspects
The Law of Contracts in Turkey is primarily governed by theTurkish Code of Obligations (TCO), which provides a comprehensive framework for the formation, validity, interpretation, and enforcement of contracts. As a civil law system inspired by Swiss law, Turkish contract law emphasizes freedom of contract, allowing parties to structure their agreements as long as they do not violate mandatory provisions of the law, public policy, or good morals.
Formation of Contracts
A contract is legally formed when two or more parties express mutual consent regarding the essential elements of the agreement. In Turkish law, contracts can be established both in written and oral form, though certain contracts, such as real estate transactions and employment contracts, must adhere to specific formalities. A key principle in Turkish contract law is the offer and acceptance model, where the offer must be clear and the acceptance unconditional for the contract to be valid.
Validity and Defects of Will
For a contract to be valid under Turkish law, the parties must have legal capacity , meaning they must be of sound mind and have the authority to enter into legal agreements. Additionally, the contract must have a lawful subject and must not conflict with public policy. Turkish law recognizes defects in consent, such as fraud, mistake, duress, and misrepresentation, which can render a contract voidable. If one party can demonstrate that their consent was flawed due to any of these defects, they have the right to annul the contract.
Interpretation of Contracts
Under the Turkish legal framework, contracts are interpreted by looking primarily at the mutual intent of the parties. If the terms are ambiguous, judges or arbitrators may interpret the contract in line with the principles of good faith and the ordinary meaning of the terms, while considering the surrounding circumstances and the customary practices in the relevant industry. This ensures that contracts are interpreted fairly and reflect the true intent of the parties.
Performance and Breach of Contract
Once a contract is validly formed, both parties are legally bound to perform their obligations as agreed. Turkish law emphasizes the principle of pacta sunt servanda , meaning that agreements must be honored. If one party fails to fulfill their contractual obligations, the other party has several remedies under Turkish law, including specific performance, damages, or termination of the contract.
In cases where unforeseen circumstances make the performance of the contract excessively burdensome, Turkish law recognizes the doctrine of hardship(known as "excessive difficulty" under the TCO). The affected party may request an adjustment to the terms of the contract or, if an agreement cannot be reached, seek termination through judicial intervention.
Termination and Invalidity
Contracts may be terminated in a variety of ways, such as mutual agreement, completion of the contractual obligations, or via unilateral termination if provided for within the contract itself. Moreover, contracts can be terminated or rendered invalid if they violate mandatory provisionsof the law, public policy, or morality. If a contract is deemed invalid from the start, Turkish law treats it as if it never existed, and the parties may have to return any benefits obtained under the contract.
Conclusion
The Turkish Law of Contracts offers a flexible yet structured approach, ensuring that parties have freedom in drafting their agreements while maintaining essential protections for fairness and justice. With provisions covering formation, performance, breach, and termination, the TCO creates a robust legal environment for both domestic and international commercial relationships. Whether in domestic transactions or cross-border agreements, the contract law framework in Turkey ensures that agreements are clear, enforceable, and just.