7 Essential Turkish Contract Types Every Investor Should Know: A Comprehensive Guide

In the dynamic landscape of business and investment, understanding the various Turkish contract types is crucial for success. As Akkas & Associates Law Firm, with over three decades of experience in Turkish law, we’ve compiled this comprehensive guide to help you navigate the intricacies of Turkish contracts.

Table of Contents

Whether you’re a foreign investor, entrepreneur, or business professional, this article will provide you with valuable insights into the most important contract types in Turkey.

Civil Contracts

Civil contracts are governed by civil law and encompass a wide range of agreements, such as wills, gifts, and barter transactions. These contracts are typically between individuals and are subject to the provisions of the Turkish Civil Code.

Commercial Contracts

Commercial contracts are the most common type of contract encountered by businesses in Turkey. These contracts are related to commercial transactions, such as real estate deals, buying and selling goods, and supply agreements. Commercial contracts are governed by the Turkish Commercial Code and are subject to specific regulations and requirements.

Administrative Contracts

Administrative contracts are those that regulate the conduct of administrative work and are typically entered into between businesses and government entities. These contracts are subject to administrative law and may have unique requirements and procedures.

4 Key Types of Employment Contracts

Employment contracts are a crucial aspect of any business, and in Turkey, there are four main types of employment contracts:

1. Definite and Indefinite Term Contracts: Definite term contracts have a predetermined end date, while indefinite term contracts have no set expiration. Definite term contracts must be in writing and cannot be renewed more than once without a valid reason.
2. Part-Time and Full-Time Contracts: Part-time contracts have a maximum of 30 hours per week, while full-time contracts have a maximum of 45 hours per week. Part-time employees cannot be treated differently than full-time employees without a legitimate reason.
3. Trial Period Contracts: These contracts allow for a trial period of up to 2 months (or 4 months with a collective bargaining agreement) during which either party can terminate the contract without notice.
4. On-Call Contracts: On-call contracts are need-based agreements where the employee performs work when needed by the employer. Unless otherwise agreed, the employer must provide at least 4 days’ notice and employ the worker for a minimum of 4 consecutive hours per call.

Penal Clauses in Contracts

While not specifically regulated in the Labor Law, the Turkish Code of Obligations allows for the inclusion of penal clauses in contracts. These clauses outline penalties for non-performance or breach of contract.

Penal clauses should be fair and apply equally to both parties, and they are commonly used in fixed-term employment contracts to ensure compliance with the agreement.

Notarization and Language Requirements

In Turkey, notarizing a contract is not mandatory but can help prevent potential disputes in the future. Contracts that are commonly notarized include real estate contracts, rental agreements, powers of attorney, and marriage contracts.

Turkish law requires that all contracts between Turkish companies and enterprises be written in Turkish. Foreign companies operating in Turkey or having contracts with Turkish companies must also use Turkish in their contracts. If a contract requires approval from a foreign authority, it must be written in a foreign language and translated into Turkish.

Termination of Contracts

The termination of a contract in Turkey can occur for various reasons, such as negligence, defects, or delays in performance. In such cases, the contract can be terminated by filing a lawsuit with the competent judiciary.

Electronic Contracts

Electronic contracts are recognized as valid and enforceable in Turkey, provided they are signed electronic documents such as PDFs or emails. However, certain contracts involving family law, personal rights, inheritance law, or real estate cannot be concluded electronically.

7 Essential Turkish Contract Types

1. Sale Contracts (Satış Sözleşmeleri)

Sale contracts are fundamental in Turkish commercial law, governing the transfer of ownership of goods or property from one party to another in exchange for payment. These contracts are regulated by the Turkish Code of Obligations and the Turkish Commercial Code.

Key features of Turkish sale contracts include:

• Clear identification of the parties involved
• Detailed description of the goods or property being sold
• Agreed-upon price and payment terms
• Delivery conditions and timeframe
• Warranties and representations

For real estate transactions, sale contracts must be executed before a notary public and registered with the land registry to be legally binding.

2. Lease Contracts (Kira Sözleşmeleri)

Lease contracts are crucial for both residential and commercial property rentals in Turkey. These contracts outline the terms under which a property owner (lessor) allows a tenant (lessee) to use their property for a specified period.

Important elements of Turkish lease agreements include:

• Duration of the lease
• Rent amount and payment schedule
• Security deposit requirements
• Maintenance responsibilities
• Conditions for termination or renewal

It’s worth noting that Turkish law provides significant protections for tenants, especially in residential leases.

3. Employment Contracts (İş Sözleşmeleri)

Employment contracts in Turkey are governed by the Turkish Labor Law and define the relationship between employers and employees. These contracts are essential for protecting both parties’ rights and outlining their obligations.

Key components of Turkish employment contracts include:

• Job description and responsibilities
• Working hours and overtime arrangements
• Salary and benefits
• Annual leave entitlement
• Probation period (if applicable)
• Termination conditions

Employers should be aware of the strict regulations surrounding employee rights and dismissal procedures in Turkey.

4. Distribution Agreements (Dağıtım Sözleşmeleri)

Distribution agreements are crucial for businesses looking to expand their reach in the Turkish market. These contracts establish the relationship between a supplier and a distributor, outlining the terms under which the distributor will sell the supplier’s products.

Essential elements of Turkish distribution agreements include:

• Exclusivity clauses (if applicable)
• Territory definition
• Sales targets and performance metrics
• Marketing and promotional responsibilities
• Intellectual property protection
• Termination and post-termination obligations

Foreign companies entering the Turkish market often use distribution agreements as a low-risk entry strategy.

5. Franchise Agreements (Franchise Sözleşmeleri)

Franchising has become increasingly popular in Turkey, particularly in the retail and food service sectors. Franchise agreements govern the relationship between the franchisor (the brand owner) and the franchisee (the local operator).

Key aspects of Turkish franchise agreements include:

• License to use the franchisor’s trademarks and business system
• Initial fees and ongoing royalties
• Training and support obligations
• Quality control and operational standards
• Territory rights
• Term and renewal conditions

While there is no specific franchise law in Turkey, these agreements are subject to various regulations, including competition law and intellectual property rights.

6. Joint Venture Agreements (Ortak Girişim Sözleşmeleri)

Joint venture agreements are common in Turkey, especially for large-scale projects or when foreign investors partner with local companies. These contracts establish the terms of cooperation between two or more parties for a specific business venture.

Critical components of Turkish joint venture agreements include:

• Contribution of each party (capital, assets, expertise)
• Profit and loss sharing arrangements
• Management structure and decision-making processes
• Intellectual property rights
• Dispute resolution mechanisms
• Exit strategies

Joint ventures can be structured as partnerships or incorporated as separate legal entities under Turkish law.

7. Construction Contracts (İnşaat Sözleşmeleri)

With Turkey’s booming construction sector, construction contracts play a vital role in the country’s economic landscape. These agreements govern the relationship between property owners, contractors, and sometimes subcontractors for building projects.

Key elements of Turkish construction contracts include:

• Scope of work and project specifications
• Timeline and milestones
• Payment terms and conditions
• Quality standards and inspections
• Warranty periods
• Force majeure clauses
• Dispute resolution mechanisms

Construction contracts in Turkey often follow international standards, such as FIDIC (International Federation of Consulting Engineers) templates, adapted to comply with Turkish law.

Conclusion: Navigating Turkish Contracts with Expert Guidance

Understanding these seven essential Turkish contract types is crucial for anyone doing business in Turkey. Each contract type comes with its own set of legal considerations, potential pitfalls, and opportunities. At Akkas & Associates Law Firm, we specialize in drafting, reviewing, and negotiating all types of contracts under Turkish law.

With our deep understanding of both local regulations and international best practices, we ensure that our clients’ interests are protected while facilitating smooth business operations in Turkey.

Whether you’re entering into a sale agreement, establishing a joint venture, or navigating complex construction contracts, our experienced team is here to guide you through every step of the process.

For personalized advice tailored to your specific needs, don’t hesitate to contact our expert legal team at Akkas & Associates Law Firm. With our assistance, you can confidently navigate the Turkish legal landscape and achieve your business objectives in this vibrant and growing market.