309 / 516
contracts under the PTCC. However, well-settled decisions of the
Turkish Supreme Court of Cassation
3
and Turkish legal doctrine had
recognized the distributor’s (and/or the agent’s) right to claim goodwill
indemnity from the supplier (and/or the principal).
For example, the 19
th
Circuit of the Supreme Court of Cassation
had granted goodwill indemnity in favor of a terminated distributor
who improved the clientele and goodwill of the producer company
with its decision dated May 4, 2000
4
numbered 2000/3470. In this
decision, the Supreme Court of Cassation ruled in favor of the distrib-
utor stating that except for termination of a distribution contract for
justified grounds, the exclusive distributor losing its clientele and suf-
fering financial distress as a result of such termination is entitled to
claim goodwill indemnity. The Supreme Court of Cassation justified
its findings by means of factual evidence that the distributor had intro-
duced the goods into the Turkish market and made significant efforts
to advertise and market the producer company’s trademark.
Furthermore, the Supreme Court of Cassation asserted that the exclu-
sive distributor who partially or significantly enlarged the clientele of
the producer company’s products shall be entitled to an appropriate
compensation where the contract is terminated without a justifiable
reason.
The TCC adopts a similar approach and fills the gap of the PTCC
in relation to claims of goodwill indemnity. Therefore, the provisions
of Article 122 of the new TCC are also applicable to exclusive distrib-
ution contracts and other continuous contractual relationships granting
an exclusive right, as long as the situation shall not be against good
faith.
The TCC establishes three major conditions for goodwill indemni-
ty to be claimable. These are: (i) the termination is not based on justi-
fiable grounds; (ii) the supplier must derive significant benefits from
the clientele formerly introduced by the distributor (the Distributor)
after termination of the distribution; and (iii) payment of the indemni-
ty must be compatible with fairness and equity.
LAW OF OBLIGATIONS
295
3
See,
inter alia
, decision of the 19 th Chamber, No. 2000/3470 of May 4, 2000.
4
Supreme Court of Cassation, 19 th . Circuit of Law, the decision dated 04.05.2000 and numbered
1999/7724 E., 2000/3470 K.