Trade relations between European companies and their Turkish business partners are characterized by dynamic markets and a constant flow of goods. In day-to-day practice, contracts are often concluded in a pragmatic manner: an order, a confirmation – and seemingly, that’s all it takes. However, as soon as complaints arise – whether due to quality defects, transport damage, or non-payment – the pitfalls of insufficient contractual regulation become painfully evident.

Many companies rely on habitual procedures or standardized forms. Yet when legal claims must be enforced across borders, critical questions emerge that cannot be answered without sound contractual arrangements: Which law applies? Which court has jurisdiction? What happens when general terms and conditions conflict? And how does the CISG (UN Sales Convention) apply in practice?

In European-Turkish commercial relations in particular, one thing becomes clear: forward-looking contract drafting – especially with regard to precise choice-of-law and jurisdiction clauses – is not a mere formality. It is a strategic tool for risk management. Only those who understand the legal frameworks of both jurisdictions can plan reliably and protect themselves effectively in the event of a dispute.

       I.            LEGAL FRAMEWORK: INTERNATIONAL CONTRACTS IN EUROPEAN-TURKISH TRADE

In cross-border trade between Europe and Turkey, international conventions and national legal sources play a central role. Businesses aiming to operate with legal certainty must clarify, even before entering into a contract, which legal system will apply and what consequences will arise—particularly in the event of a future dispute.

A key instrument in this context is the United Nations Convention on Contracts for the International Sale of Goods (CISG), which has been ratified by both Turkey and many European countries. Unless the parties explicitly agree otherwise, the CISG generally applies to cross-border sales contracts—regardless of whether the parties are even aware of its application. Nonetheless, it remains essential to also consider supplementary national laws, such as those governing statutes of limitation, product liability, or consumer protection.

This becomes especially relevant in complex, multilateral supply chain constellations—for instance, a contract concluded in France, with goods shipped from Poland via Turkish intermediaries to a recipient in Europe. In such cases, determining the applicable law is far from straightforward. The question of which legal system governs a dispute is primarily answered by the private international law rules of the court seized of the matter. In most European jurisdictions, this typically points to the law of the country most closely connected to the contract; in Turkey, similar connecting factors apply.

Austrian and Swiss law are also frequently used in contractual practice as a "neutral middle ground"—especially due to their structural similarities with Turkish civil law. While this may appear pragmatic at first glance, it often poses challenges for European law firms, who may lack in-depth familiarity with those foreign legal systems.

A particularly sensitive area concerns contracts involving consumers. Here, the room for contractual freedom is significantly limited: key consumer protection rules—particularly regarding withdrawal rights, warranty periods, or manufacturer liability—cannot be overridden by choice-of-law clauses. The decisive factor is always the consumer’s country of residence.

Anyone aiming to establish stable, long-term supply relationships with Turkish business partners should therefore look beyond formal contractual elements like choice-of-law or jurisdiction clauses. A comprehensive risk assessment must take into account all relevant layers of law—national and international alike.

     II.            CONTRACT DRAFTING IN PRACTICE: CONTENT, FORM, AND LEGAL VALIDITY

A legally secure cross-border sales contract begins with selecting the appropriate contract type and ideally ends with a clear allocation of risk, liability, and enforcement mechanisms. Especially in European-Turkish trade relations, there are legal particularities that are often overlooked in practical contract drafting—sometimes with significant consequences.

1.      CONTRACT TYPES AND HYBRID STRUCTURES

As in many European jurisdictions, both sales contracts and contracts for work and services are recognized under Turkish civil law. However, in practice, hybrid contractual forms often arise—for example, in industrial manufacturing based on client specifications. Turkish law does not recognize a separate contract category equivalent to the German "contract for the supply of goods to be manufactured or produced" (Werklieferungsvertrag). Instead, the relevant obligations are assigned either to sales or service contract law. This makes it essential to clearly delineate the respective performance duties within the contract to avoid disputes later on.

2.      FORM REQUIREMENTS: FROM REAL ESTATE TRANSACTIONS TO VEHICLE SALES

While contracts for movable goods are generally not subject to formal requirements, specific types of contracts do require strict adherence to formalities. Real estate purchases, for instance, must be notarized and processed through the competent land registry. For vehicle transfers, notarization is also the standard practice in Turkey, as the vehicle registry is managed exclusively by notaries and records related securities (such as liens) accordingly.

In practice, it is also common to notarize a “promise of sale” (satış vaadi sözleşmesi) before the actual property transfer. These preliminary agreements may already include binding terms regarding construction specifications or payment schedules. Depending on their content, such pre-contracts can trigger substantial legal obligations—even before land registration occurs. Therefore, utmost care is required even at the pre-contractual stage.

3.      GENERAL TERMS AND CONDITIONS (GTCs): REQUIREMENTS FOR VALID INCORPORATION

The use of general terms and conditions in contractual relations is also permissible under Turkish civil law, provided certain conditions are met. The Turkish Code of Obligations, thoroughly revised in 2012, sets out the relevant framework—broadly aligned with continental European standards.

a.     Transparency and Comprehensibility

GTCs must be made available to the contractual partner prior to contract conclusion. If the terms are only presented with the invoice or in subsequent correspondence, they are generally not considered part of the contract. Moreover, the language used must be understandable to the other party—otherwise, the clause may be deemed entirely ineffective.

b.     Compatibility and Subordination to Default Law

Turkish law does not recognize a doctrine equivalent to “performance under reservation of objection.” Instead, GTCs must be consistent with the rest of the contract and must not contain unreasonable surprises or one-sided modifications. Dubious clauses may be subject to judicial scrutiny and invalidated.

c.     Conflicting GTCs from Both Parties

If both parties refer to their own GTCs, only those provisions that are materially consistent with one another are deemed effective. If both sets of terms include so-called "exclusion clauses" rejecting the applicability of the other’s conditions, the entire GTC section may be disregarded, and only the applicable default legal provisions will apply.

This legal framework makes clear that the use of GTCs in European-Turkish commercial transactions must be approached with care—especially regarding language choice, timing of delivery, and compliance with mandatory statutory provisions.

4.      CONTRACTUAL PENALTIES AND OTHER SANCTIONS UNDER TURKISH LAW

The inclusion of sanctions to safeguard contractual obligations is also recognized under Turkish private law. One of the most established instruments in this regard is the contractual penalty clause (cezai şart), which serves as a pre-determined compensation for breaches of primary or secondary obligations arising from the contract.

Such penalty clauses may be structured in various ways: as a substitute for performance, in addition to performance, or specifically for cases of delay. For the clause to be valid and enforceable, it must be clearly worded and precisely calculable—either by stating a fixed amount or an unambiguous formula for determining the penalty. Clauses that are too vague or indeterminate may be deemed unenforceable in court.

In exceptional cases, courts may reduce or adjust a contractual penalty—particularly where its enforcement would threaten the economic survival of the debtor. However, for merchants and commercial entities, the scope for such judicial intervention is significantly limited and reserved for narrowly defined circumstances.

   III.            TRANSFER OF OWNERSHIP AND RISK

The transfer of ownership and risk in the context of cross-border deliveries of goods or real estate transactions is a particularly sensitive aspect of contract drafting—especially when different legal systems collide. European and Turkish law follow fundamentally different legal doctrines in this area, which can have significant consequences for the allocation of risk.

1.      SECURITY INSTRUMENTS: RETENTION OF TITLE AND ALTERNATIVES

One widely used security mechanism in European trade practice—the retention of title clause (Eigentumsvorbehalt)—faces considerable legal barriers under Turkish law. Such clauses are only valid in Turkey if they are registered in a notarial public registry. In practice, this requirement means that retention of title clauses in deliveries to Turkey are either ineffective or subject to burdensome formalities. Even if the underlying contract is governed by foreign (e.g. European) law, Turkish courts generally treat the registration requirement as a matter of ordre public and thus regularly disregard unregistered retention of title provisions. 

Practical alternatives include the registration of a pledge (secured by a notarized deed) or the issuance of post-dated cheques or promissory notes, which are relatively straightforward to enforce under Turkish law.

2.      TRANSFER OF RISK: CONTRACTUAL CLARITY IS CRUCIAL

Another critical issue is the transfer of risk—that is, the point in time at which the risk of accidental loss or deterioration of the goods passes to the buyer. Under Turkish law, this risk generally passes at the moment the contract is concluded, unless the parties explicitly agree on a different place of performance (e.g. place of delivery). Even if the seller organizes the shipment, this does not, in itself, imply liability for transport damage—unless expressly agreed. The seller’s obligation is limited to selecting a careful carrier.

The use of Incoterms (e.g., CIF, DAP, etc.) can provide a framework for resolving such issues, but they are not self-executing: the parties should always supplement them with clear contractual provisions on risk transfer and liability during transport. This is especially important because European and Turkish courts may interpret Incoterms differently in practice.

   IV.            WARRANTY AND LIABILITY: REMEDIES FOR DEFECTS AND MANUFACTURER RESPONSIBILITY

Defective goods are a frequent source of disputes in international trade—particularly when legal expectations differ. In European-Turkish business relations, companies must clearly understand their rights in cases of faulty deliveries, the applicable deadlines, and how liability is distributed between seller, importer, and manufacturer.

1.      WHAT CONSTITUTES A DEFECT?

Under Turkish civil law, a product is considered defective if it does not possess the agreed-upon qualities or is unfit for its intended purpose. This definition largely mirrors that found in many European jurisdictions. Whether a machine runs too slowly, an item of clothing deviates from the order, or goods arrive damaged—all of these can constitute a defect.

2.      INSPECTION AND NOTIFICATION OBLIGATIONS: DIFFERENCES BETWEEN BUSINESS AND CONSUMER TRANSACTIONS 

In business-to-business transactions, Turkish law imposes strict duties to inspect and report defects without delay. The buyer must inspect the goods immediately upon delivery. Obvious defects must generally be reported within two days, and in any case, the inspection and notification must be completed within eight days. Failure to meet these deadlines can result in a complete loss of warranty rights.

In the case of hidden defects—those not detectable upon initial inspection—the buyer must notify the seller as soon as the defect is discovered, without undue delay.

Consumer transactions are subject to significantly more lenient rules. Consumers may assert defects even at a later stage, provided they can demonstrate that the defect already existed at the time of delivery. A key tool here is the six-month presumption rule: if a defect appears within six months, it is presumed to have existed at the time of delivery—unless the seller proves otherwise.

3.      REMEDIES FOR DEFECTS

If the goods are defective, the buyer may choose from several remedies:

·         Repair (remedy of the defect)

·         Replacement (delivery of defect-free goods)

·         Reduction of the purchase price

·         Withdrawal from the contract

·         Damages (for direct and indirect losses)

These remedies are generally available concurrently. The appropriate remedy in each case depends on the severity of the defect and what is reasonable for both parties. In commercial practice, replacement or price reduction is often the most pragmatic option.

The standard limitation period for warranty claims is two years from delivery. However, this period can be extended through contractual guarantees. A previous rule that limited business warranty claims to just six months was abolished as part of the 2012 legal reform.

4.      PRODUCT LIABILITY AND IMPORTER RESPONSIBILITY

Another key aspect is product liability. Under Turkish consumer protection law, not only the seller but also the importer or manufacturer may be held liable—regardless of fault. The only decisive factor is whether the product was defective when it entered the market.

To avoid liability, the importer or manufacturer bears the burden of proof and must demonstrate that the defect occurred after importation, e.g., due to improper transport. In most cases, they are at least obligated to repair or replace the defective product. However, they are not automatically liable for contract rescission or damages.

     V.            DISPUTE RESOLUTION: JURISDICTION, ARBITRATION, AND ENFORCEMENT

Contractual clarity is only half the battle—in the event of a dispute, the forum of proceedings often determines whether rights can be enforced effectively. In cross-border commercial relations between Europe and Turkey, it is therefore crucial to address issues of jurisdiction and alternative dispute resolution at an early stage.

1.      JURISDICTION: WHAT DETERMINES WHERE A DISPUTE IS HEARD?

Which court has jurisdiction in case of a dispute is generally determined by international civil procedure rules—namely, the legal provisions governing jurisdiction in cross-border situations. Both European and Turkish legal systems apply similar principles: the court at the defendant’s place of residence or business is typically competent. Alternatively, jurisdiction may also arise from the place of performance, the location of the relevant asset, or, in some cases, the domicile of a commercial agent.

Without an explicit jurisdiction clause, it is entirely possible for a party to find itself litigating—or defending—a case in an unexpected forum. It is therefore strongly recommended to include a clear jurisdiction clause, ideally in combination with a choice-of-law clause, to avoid conflicting outcomes.

Real estate transactions in Turkey represent a special case: they are subject to mandatory jurisdiction at the court where the relevant land registry is located. This means, for example, that a European judgment regarding the acquisition of property in Istanbul cannot be enforced in Turkey unless it was issued by a Turkish court. In this area, exclusive jurisdiction applies.

2.      STRATEGIC JURISDICTION CLAUSES – WHAT REALLY MATTERS

Jurisdiction should not be chosen solely for reasons of convenience or national familiarity. Key strategic factors include:

·         Duration of proceedings: Turkish courts are often significantly slower than their European counterparts, with long delays in some cases.

·         Cost structure: Litigation costs in Turkey can be considerably higher—especially in cases involving high monetary values.

·         Enforceability: A judgment issued in one country is not automatically enforceable in the other. It typically requires a recognition procedure or a bilateral enforcement agreement.

·         Legal competence: Courts may lack familiarity with foreign law—Turkish courts may be less adept at applying European contract law, and vice versa.

For this reason, jurisdiction clauses should not be chosen reflexively to favor one’s home country. A wise choice is guided by enforceability and procedural practicality.

3.      ARBITRATION: LEGAL CERTAINTY FOR INTERNATIONAL CONTRACTS

For international contracts—especially in European-Turkish trade—it is often advisable to agree on arbitration already at the contract formation stage, not when a dispute has arisen. Arbitration provides a confidential, efficient, and flexible means of dispute resolution—and thanks to the New York Convention, arbitral awards are enforceable in over 160 countries.

For example: a European machinery manufacturer delivers to Konya and agrees to arbitration in Vienna, in German, under Swiss law. Such arrangements are entirely valid—but only if clearly and comprehensively defined.

 Essential elements include the rules of procedure (e.g., DIS, ICC, VIAC, ISTAC), the seat of arbitration, the language, and the applicable law. Vague or generic clauses can result in disputes over jurisdiction or even render the clause invalid.

In practice, the most frequently used arbitration institutions in this context are:

·         ICC (International Chamber of Commerce)

·         DIS (German Arbitration Institute)

·         VIAC (Vienna International Arbitral Centre)

·         ISTAC (Istanbul Arbitration Centre)

The best choice depends on the subject matter, the legal environment, and the target jurisdiction for enforcement. 

SERVICES OFFERED BY VURAL & DEMIR LAW AND CONSULTING 

Based in Istanbul and internationally oriented, Vural & Demir Law and Consulting provides comprehensive legal support to European businesses operating in Turkey or entering into cross-border contracts with Turkish partners.

Our services include: 

·         Drafting and review of cross-border sales, supply, and service contracts, including general terms and conditions (GTCs), retention of title clauses, and payment security mechanisms

·         Tailored choice-of-law and jurisdiction clauses, aligned with the strategic interests and risk profiles of our clients

·         Advice on warranty and liability issues in European-Turkish trade relations, including application of the UN Convention on Contracts for the International Sale of Goods (CISG)

·         Support in public tenders and contracts with Turkish authorities, including translation, legal review, and negotiation on-site

·         Representation in litigation and arbitration proceedings, particularly before Turkish commercial courts and in international arbitration (ICC, DIS, VIAC, ISTAC)

With intercultural expertise, dual legal qualifications among our partners, and multilingual client service (German, Turkish, English), we provide the legal foundation for secure and sustainable business relations between Europe and Turkey.

VURAL & DEMİR

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