business law in turkey

COMMERCIAL LAW: FUNDAMENTAL RULES OF THE BUSINESS WORLD

Commercial law plays an important role as a legal branch that regulates the fundamental rules of the business world and commercial relationships. Business law in Turkey encompasses the daily operations of businesses, the formation of commercial contracts, the resolution of commercial disputes, and the regulation of competition.

First and foremost, Turkish commercial law regulates the process of establishing companies. This legal branch covers matters such as determining the legal status of a company, defining the rights and responsibilities of partners, establishing company organs, and determining the management structure. Turkish Commercial law ensures the preparation of all necessary documents for company formation and the compliance with relevant legal procedures. You can refer to our article on setting up a company in Turkey and the types of companies for more information.

The role of business law in Turkey is significant in the daily operations of businesses. Commercial contracts form the basis of relationships between businesses. Commercial legislation determines the formation, validity, provisions, and sanctions applicable in case of contract breaches. Additionally, business law in Turkey regulates the relationships between businesses and consumers and ensures consumer protection.

Turkish Commercial law also plays a crucial role in the resolution of commercial disputes. Courts or alternative dispute resolution methods are used to resolve disputes, including disagreements between businesses, debt disputes, or other commercial disputes. Turkish Commercial law aims to provide a fair and effective resolution by determining the processes of dispute resolution and protecting the rights of the parties involved.

The regulation of competition is also an important aspect of commercial life. Business law in Turkey aims to preserve free competition and establish market order. Within this framework, topics such as preventing unfair competition, combating monopolies, and regulating marketing and advertising activities are governed by commercial legislation. This ensures a fair competition environment among businesses, aims to protect consumer rights, promotes economic growth, and maintains market equilibrium.

Turkish commercial law also plays an active role in the regulation of international trade agreements. With the increasing globalization, commercial relationships and collaborations between countries have gained importance. Commercial legislation establishes the legal framework for international trade, enabling the formation and implementation of international trade agreements. Alternative dispute resolution methods such as international arbitration are used to resolve disputes arising from international trade agreements.

Finally, business law in Turkey emerges as a constantly evolving field. Technological advancements, the rise of digital commerce, and new trade models are among the topics that commercial law needs to adapt to. In this context, data protection, electronic contracts, cybersecurity, and other related subjects hold significant importance. In the rapidly changing business environment, commercial legislation should be regularly updated and adaptable to innovations.

Article 1 of the Turkish Commercial Code – The Turkish Commercial Code is an integral part of the Turkish Civil Code numbered 4721, dated 22/11/2001. The provisions of this Code, along with the special provisions written in other laws regarding transactions and acts concerning a commercial enterprise, are commercial provisions. In cases of commercial matters where there is no specific provision, the court shall decide according to commercial customs and practices, and if these are also absent, according to general provisions.

PRINCIPLES OF TURKISH COMMERCIAL LAW

The Turkish Commercial Law establishes the fundamental legal framework governing commercial relationships and the activities of businesses in Turkey. The basic principles of Turkish commercial law aim to ensure fair and orderly conduct of commercial transactions, provide a secure and stable environment for trade, and offer protection to businesses. The key principles of business law in Turkey are as follows:

  • Principle of Free Trade: One of the fundamental principles of commercial life in Turkey is the principle of free trade. According to this principle, businesses are free to engage in trade, freely exchange goods and services, and market their products. State intervention should be kept to a minimum. The principle of free trade promotes competition, supports innovation, and fosters economic growth.
  • Principle of Commercial Good Faith: According to the Turkish Commercial Law, parties involved in commercial relationships are required to act in good faith. This principle is based on values such as honesty, fair conduct, and fidelity to contracts. It establishes trust between parties and represents justice in the resolution of commercial disputes.
  • Principle of Equality: The Turkish Commercial Law embraces the principle of equality among parties in commercial relationships. This principle states that businesses have the right to engage in trade under equal legal and economic conditions. The principle of equality is important to prevent power imbalances between parties and ensure a fair competitive environment.
  • Principle of Freedom of Contract: The Turkish Commercial Law recognizes the freedom of parties to enter into agreements based on their free will in commercial contracts. Parties are free to determine the terms and provisions of contracts and have the freedom to enter into or terminate contracts. However, the Turkish Commercial Code imposes certain rules and limitations on specific types of contracts.
  • Principle of Competition: The preservation of competition is an important principle of Business law in Turkey. It is closely related to competition law and aims to conduct commercial activities in a competitive environment. Protecting competition supports the establishment of a healthy market structure, enables consumers to access various choices, and promotes competitive prices.
  • Prevention of Unfair Competition: Another significant principle of Turkish commercial law is the prevention of unfair competition. Honesty and compliance with competition rules are essential in commercial activities. Preventing unfair competition includes matters such as trademark infringements, misleading advertising, and protection of trade secrets, with the aim of ensuring fair competition.
  • Legal Security: Business law in Turkey aims to provide legal security to the parties involved. This security includes the proper execution of commercial transactions in accordance with the law, protection of contracts, and fair resolution of disputes. Respecting the rights and obligations of parties and ensuring the rule of law are essential in this regard.
  • Importance of Commercial Contracts: According to the Turkish Commercial Law, contracts play a crucial role in commercial relationships. Contracts between parties determine commitments, rights, and obligations. Compliance with contract provisions and the validity of contracts are significant.

These principles form the foundation of business law in Turkey and serve as guidelines for businesses and individuals engaged in commercial activities.

turkish commercial law

SOURCES OF BUSINESS LAW IN TURKEY

The sources of business law in Turkey constitute the foundation of the rules and principles that make up commercial legislation. These sources typically include legal texts and regulations, court decisions, and international agreements.

  • Legal Texts: Each country’s commercial legislation is determined by its legal texts. Laws such as the Commercial Code, Companies Act, and Obligations Act form the fundamental basis of commercial law.
  • Court Decisions: Court decisions serve as an important source for the interpretation and application of Turkish commercial law. High court rulings shape legislation based on the precedents set by previous cases.
  • International Trade Agreements: International trade agreements hold great significance in international trade. For instance, the United Nations Convention on Contracts for the International Sale of Goods (CISG) regulates international sales contracts and has been accepted by many countries.

SCOPE OF TURKISH COMMERCIAL LAW

Turkish Commercial law is a branch of law that establishes the fundamental rules of the business world and regulates commercial relationships. It encompasses important areas such as freedom of contract, fairness, and consumer protection. It also includes company law, commercial contracts, competition law, international trade law, and commercial enterprise law.

  • Company Law: One of the key areas of Turkish commercial law is company law. It regulates the establishment, management, capital structure, shares, governing bodies, and shareholder rights of companies. The responsibilities and limitations of commercial companies are also determined in this field.
  • Commercial Contracts: Commercial contracts, which form the basis of commercial relationships, constitute a significant area of Turkish commercial law. Various types of contracts, including sales contracts, service agreements, distribution agreements, and licensing contracts, are examined under commercial law.
  • Competition Law: Competition law covers the regulation of competition in commercial activities. It aims to prevent unfair competition among enterprises and the disruption of competition. This includes examining areas such as mergers, cartels, competition violations, and monopolistic practices.
  • International Trade Law: International trade law covers the regulation of commercial relationships between different countries. It addresses topics such as exports, imports, international trade agreements, payment methods, and international arbitration. International trade law addresses issues of reliability, contract practices, and dispute resolution among parties.
  • Commercial Enterprise Law: Commercial enterprise law is applied throughout the process from the establishment to the termination of a business. It examines the activities of commercial enterprises, registration in the commercial registry, maintenance of commercial books, bankruptcy, and concordat procedures.

These areas collectively form the scope of Turkish commercial law and provide guidance for businesses and individuals engaged in commercial activities.

COMMERCIAL LITIGATION IN TURKEY

Commercial litigation plays a significant role in the resolution of commercial disputes in Turkey. Commercial litigation involve the resolution of commercial disputes in courts. These types of cases typically cover topics such as contract breaches, compensation claims, arbitration proceedings, bankruptcy, and concordat applications. Swift and effective resolution of commercial litigation is of great importance in establishing trust in the business world. Commercial cases are generally heard in specialized commercial courts with judges who have expertise inbusiness law in Turkey, ensuring faster and more efficient resolution of commercial disputes.

Alternative dispute resolution methods can also be used in the resolution of commercial ltigation. Arbitration allows the parties to resolve disputes through the appointment of an arbitrator by mutual agreement. Arbitration is often preferred as a faster, private, and commercially confidential method.

Some common types of commercial cases in Turkey include:

  • Contract Breaches: These cases involve disputes related to commercial contracts between parties according to business law in Turkey. For example, breaches or disputes concerning contracts such as delivery of goods, service agreements, and supplier contracts can be categorized as contract breach cases.
  • Compensation Claims: These are lawsuits filed based on claims of one party causing harm to another. For instance, situations such as damages arising from faulty product delivery or financial losses due to unfair competition fall under compensation claims.
  • Intellectual Property Cases: These cases involve disputes related to intellectual property matters such as trademarks, patents, and copyrights. They address allegations of infringement of one party’s intellectual property rights.
  • Competition Law Cases: These are lawsuits filed due to activities that violate competition law. Examples include cases related to cartels, unfair competition, and abuse of monopoly power.
  • Bankruptcy Cases: These cases are related to the bankruptcy of companies unable to repay their debts. Bankruptcy cases address matters such as debt collection and asset distribution between creditors and the debtor.
  • Disputes Between Traders: These cases encompass disputes arising between two commercial enterprises. Examples of such cases include disputes related to commercial partnerships, partnership agreements, and shareholder disputes.
  • Maritime Law Cases: These cases cover commercial litigation in the maritime sector. They may involve issues such as ship charter agreements, cargo transportation, maritime accidents, and marine insurance. For example, disputes between a shipowner and a lessee or claims for compensation arising from a maritime accident can fall under maritime law cases.
  • International Trade Cases: These cases involve trade disputes between different countries. International trade cases are often resolved through international arbitration. Examples include cases related to exports, imports, international trade contracts, and violations of international trade rules.
  • Tax Cases: These cases pertain to disputes related to tax law. Commercial enterprises may have disagreements with the tax authorities regarding tax returns, tax deductions, or tax penalties, which may lead to tax lawsuits.
  • Company Law Cases: These cases involve disputes related to inter-company relationships and company law regulations according to business law in Turkey. Examples include disputes between shareholders, objections to board decisions, and violations of shareholder rights.

The aforementioned types of commercial litigation cases cover various disputes that arise in the business world. Each type of case has its own characteristics and legal procedures, depending on the nature and subject of the dispute.

TYPES OF COMMERCIAL CONTRACTS AND IMPORTANT CONSIDERATIONS

Commercial contracts play a crucial role in establishing the legal foundation of business agreements. Turkish Commercial law is significant in the creation, interpretation, and enforcement of these contracts. Commercial contracts can cover various topics such as the sale of goods, service agreements, distribution agreements, licensing agreements, and more.

It is of great importance to properly draft and structure commercial contracts to protect the rights of the parties involved. Business lawyers provide services in contract drafting, negotiation, and legal advice. This ensures that contracts are legally sound, fair, and helps prevent commercial disputes.

Types of Commercial Contracts and Trade Agreements

Some common types of commercial contracts used in business transactions include:

  • Sales Contracts: Contracts made between a seller and a buyer for the sale of goods or services. These contracts include provisions regarding the sale price, payment terms, delivery conditions, and warranty terms.
  • Lease Agreements: Contracts related to the leasing of property or real estate. The lessee rents the property or real estate from the lessor for a specified period, in exchange for payment.
  • Collaboration Agreements: Contracts that regulate partnerships or collaborations between two or more businesses. Collaboration agreements can take various forms such as strategic alliances, distribution agreements, licensing agreements, and more.
  • Distribution Agreements: Contracts made between a manufacturer or supplier and a distributor or dealer. These contracts govern the distribution, marketing, sales conditions, and territorial rights of the manufacturer’s goods or services.
  • Licensing Agreements: Contracts related to the use of intellectual property rights (patents, trademarks, copyrights, etc.). Licensing agreements allow the licensee to use the licensor’s intellectual property rights for a specified period and under specific conditions.
  • Supply Contracts: Contracts made between a supplier and a buyer. These contracts determine the supply process, quantity, quality, payment terms, and delivery conditions of goods or services.
  • Franchise Agreements: Contracts related to the use of a brand or business model. The franchisor grants a franchisee the right to use its brand, business model, and know-how within a specific region, subject to certain standards and obligations.
  • Agency Agreements: Contracts made between a company and an agency for the representation or sale of its products or services. The agency carries out activities such as finding customers, marketing, sales, and distribution within a specific region or market.
  • Joint Venture Agreements: Contracts made between two or more businesses to establish a joint venture. These contracts define the partnership structure, profit-sharing arrangements, and management and financing provisions.
  • Consultancy Agreements: Contracts made for a consultant to provide professional services to a company. Consultancy agreements include provisions regarding the consultant’s duties, duration, fees, and the responsibilities of the parties involved.
  • Non-Disclosure Agreements: Contracts made between two or more businesses to protect trade secrets and confidential information. These contracts regulate the obligations of the parties in terms of confidentiality and the use of the shared information.

Trade aggrements aim to establish the rights, obligations, and responsibilities of the parties involved in business relationships and commitments. Each type of contract includes its own specific provisions and provides a dispute resolution mechanism in case of disagreements. Seeking professional legal assistance from a business lawyer is essential in the preparation and execution of commercial trade agreeements.

Things to Consider When Drafting a Commercial Contract

There are some important points to consider when drafting commercial contracts.

  • Clear Identification of the Parties: The parties to the contract should be clearly identified. It is important to provide accurate and complete information such as the name, title, and contact details of each party. The determination of the parties’ trade names and their confirmation with official records is crucial.
  • Precise and Explicit Subject Matter: The subject matter of the contract, commitments, and reciprocal rights should be clearly and explicitly stated. The expectations and obligations of the parties should be expressed in a clear manner.
  • Detailed Specification of Contract Terms: The contract terms should comprehensively regulate the rights and obligations of the parties. Details such as payment conditions, delivery periods, and the quality of goods or services should be specified. Additionally, provisions regarding dispute resolution should be included.
  • Determination of the Relationship Between the Parties: Commercial contracts should determine the relationship between the parties. Especially in partnership or franchise agreements, the rights and obligations of the parties, terms of cooperation, compensation, and responsibilities between the parties should be clearly stated.
  • Confidentiality and Non-Competition Clauses: Commercial contracts should include provisions for the protection of trade secrets and confidential information. These provisions should determine the confidentiality obligations of the parties during and after the contract period. Additionally, there may be clauses regarding non-competition or non-employment after the termination of the contract.
  • Establishment of Dispute Resolution Mechanisms: It is important to provide a specific mechanism for resolving contract disputes. Parties may prefer resolution through court, arbitration, or mediation. Clear provisions regarding dispute resolution should be included in the contract.
  • Compliance with Legal Regulations: The contract should be in compliance with relevant laws and regulations. Compliance with provisions stipulated in the Turkish Commercial Law is particularly important. Contracts that contain provisions contradicting or invalidating legal regulations may lead to legal issues.
  • Updating and Revision of the Contract: Commercial contracts should be updated in case of changes in business conditions. Revision of contract terms or the addition of supplementary provisions may be required with the agreement of the parties. Such changes should be made in writing and obtain the approval of the parties.
  • Documenting the Contract: Commercial contracts should be prepared in writing and signed by the parties. Signed contracts are binding between the parties and serve as concrete evidence. A copy of the contract should be retained by both parties.
  • Professional Legal Support: Drafting and interpreting trade agreements can be a complex process. Therefore, it is important to seek professional legal support from a business lawyer or an international trade attorney, especially if the contract involves foreign elements.

Trade agreements are important documents that regulate the activities of businesses and establish specific rights and obligations between the parties. Careful drafting and proper implementation of contracts help protect the interests of the parties and facilitate smooth business relationships.

commercial litigation

THE SCOPE OF INTERNATIONAL TRADE LAW AND TRADE AGREEMENTS

International trade refers to the buying, selling, and exchange of goods and services between different countries. While facilitating the growth of businesses, international trade agreements also brings forth complex legal issues. There are several important points to consider from a legal perspective when engaging in international trade:

  • International Contracts: International trade is built upon international trade agreements. Trade agreements made between two or more countries establish the rights and obligations of the parties involved. International trade agreements ensure that the parties fulfill their commitments in accordance with the applicable law.
  • Dispute Resolution: Resolving disputes that arise in international trade is crucial. Disputes can be resolved through arbitration, mediation, or court proceedings. The method of dispute resolution is determined by the valid contract between the parties, and it is essential to follow the agreed-upon procedures.
  • International Trade Law: International trade is regulated by the trade law systems of individual countries. Therefore, it is important to understand the trade laws and regulations of different countries. Compliance with the trade law system of relevant countries, fulfilling legal obligations, and appropriately regulating commercial transactions are necessary.
  • Product and Service Standards: When engaging in international trade, it is important to pay attention to product and service standards. Different countries may have customs regulations, quality standards, health and safety rules, and other regulations. Therefore, it is crucial to ensure that exported or imported goods and services comply with the requirements of the relevant countries.
  • Tax and Customs Regulations: Tax and customs regulations are significant in international trade agreements. Each country has its own customs regulations, and commercial transactions should be conducted in accordance with these regulations. Considerations such as customs duties, tariffs, tax exemptions, and deductions should be taken into account in import and export processes. Compliance with the tax and customs regulations of the trading countries, fulfilling legal obligations, and seeking support from international trade attorneys and tax experts when necessary are important.
  • International Payment Terms: Payment terms in international trade are determined by agreements between buyers and sellers. Payment methods, payment deadlines, letters of credit, and other related matters should be considered. Transactions should be conducted in accordance with the payment and money transfer regulations of the relevant countries, and payment security should be ensured.
  • Language and Interpretation of Contracts: In international trade, determining the language of trade agreements and interpreting them correctly is crucial. Trade agreements should be written in a clear language with terms clearly defined to prevent misunderstandings between the parties. Additionally, when trade agreements are in a foreign language, it is important to determine which language will prevail in case of a dispute.
  • Regulatory Organizations in International Trade: Various international organizations exist to regulate and supervise international trade. For example, the World Trade Organization (WTO) establishes the rules of international trade and plays a role in resolving trade disputes. It is important to comply with the regulations of such organizations and conduct trade in accordance with the relevant rules.

There are diverse legal considerations to keep in mind when engaging in international trade, and compliance with the legal systems of each country is necessary. This way, legal compliance in commercial transactions can be ensured, steps can be taken to prevent or resolve disputes, and the interests of all parties can be protected.

RESOLUTION OF COMMERCIAL DISPUTES ACCORDING TO BUSINESS LAW IN TURKEY

Occasionally, disagreements may arise in commercial relationships. Effectively resolving these disputes ensures the maintenance of a healthy business relationship between the parties. Here are some methods commonly used for the resolution of commercial disputes:

  • Negotiation and Settlement: Negotiation and settlement are often the most suitable means of resolving disputes. The parties come together to discuss the issue, listen to different perspectives, and strive to reach a mutually agreeable solution. Negotiation and settlement are also the best option for maintaining a positive business relationship between the parties.
  • Mediation: Mediation is a resolution method where an independent third party (mediator) facilitates negotiations and directs the parties towards a settlement. The mediator helps facilitate communication between the parties, assists in problem-solving, and aims to achieve a fair agreement between them. The mediation process is typically faster, less costly, and less adversarial than litigation.
  • Arbitration: Arbitration is a preferred method for resolving disputes between parties. It allows the parties to resolve their disagreements by presenting their case to an independent arbitrator or arbitration panel. Arbitration decisions are binding and enforceable, similar to court judgments. It is a commonly used method in international trade agreements and helps in the efficient and effective resolution of commercial disputes.
  • Commercial Litigation: If the dispute cannot be resolved through negotiation, settlement, mediation, or arbitration, recourse to the commercial litigation is possible. Courts oversee the judicial process and ensure that the dispute is resolved in accordance with the law. The commercial litigation process can be more complex, time-consuming, and costly, but in some cases, it may be inevitable.

The choice of method for resolving commercial disputes depends on the nature of the disagreement and the preferences of the parties involved. The key is for the resolution process to be fair, effective, and conducive to reaching a mutual agreement.

Each method used for resolving commercial disputes has its advantages and disadvantages. Negotiation and settlement allow for the continuation of the business relationship and the protection of mutual interests. However, reaching an agreement can sometimes be challenging and time-consuming.

Mediation provides a less adversarial environment between the parties and offers quicker resolutions. However, the mediation process requires both parties to be willing to reach a settlement. It is essential for the parties to be open to listening to each other and willing to compromise.

Arbitration is a frequently preferred method for resolving commercial disputes rather than commercial litigation. Arbitration decisions made by an independent arbitrator are binding and enforceable, and it can be less time-consuming and costly compared to commercial litigation. However, in some cases, arbitration can be expensive and time-consuming for more complex disputes.

Resorting to commercial litigation may be necessary in certain situations for resolving disputes. Courts oversee the judicial process and make decisions based on the law. However, commercial litigation processes are generally lengthier, more costly, and may strain the business relationship between the parties.

In conclusion, various methods such as negotiation, settlement, mediation, arbitration, or commercial litigation can be used to resolve commercial disputes. The choice of method depends on the characteristics of the dispute, the preferences of the parties involved, and the existing legal framework. Seeking professional legal advice from a business lawyer in Turkey and selecting the appropriate method ensures the fair and effective resolution of the dispute while protecting the interests of all parties involved.

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