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Needless to say, agency contracts are automatically terminated
upon expiration, on the condition that they are not renewed by the
mutual agreement of the parties or do not contain any auto-renewal
provisions.
Goodwill Indemnity
Before the NTCC, there was no legal provision under Turkish laws
regulating the goodwill indemnity (in other words portfolio compensa-
tion) and the concept and the grounds for goodwill indemnity had been
established by Supreme Court of Cassation’s precedents.
In line with established practices of Supreme Court of Cassation,
in case of termination of the agency agreement, (regardless of whether
the three months-notice is given or not) a “portfolio compensation”
may be ordered by the court due to the goodwill created by the agent.
The method adopted to make such calculation is to leave the
compensation amount to the court’s discretion but limiting it with the
average of agent’s yearly net profit accrued during the last five years-
period.
With the NTCC entered into force, goodwill indemnity for agen-
cies is specifically regulated under article 122. Pursuant to the NTCC,
the conditions for goodwill indemnity are that:
- principal has derived significant benefit from the clientele
formerly introduced by the agent, after termination of the
agency contract;
- (as a result of the termination, agent has lost the right to claim
compensation pursuant to potential agreements with clients
that it might have entered into, had its agency rights not been
terminated by principal;
- payment of the compensation is fair and equitable.
The NTCC also provides that the amount of compensation shall
not exceed the yearly average of the agent’s annual commissions or
other payments received within the last five years. If the contract con-
tinued less than five years, then the yearly average of the whole activ-
ity period shall be taken into consideration. The NTCC specifically
states that if the agent terminates the contract on its own or the pro-
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NEWSLETTER 2012