Agency Contracts Under Turkish Law And Newly Regulated Matters
Legal Framework of Agency Contracts
Agency contracts are regulated under the new Turkish Commercial Code No. 6102 (“NTCC”) in a more detailed manner and some legal issues, which were not prescribed by the law but regulated as per Supreme Court of Appeals’ decisions, are reflected in the text of the code for the first time. Therefore, while in this paper we review the general provisions of the new law on agency contracts, we also evaluate the new issues regulated in the new law.
Pursuant to Article 102 of the NTCC, “he/she who takes as a profession the permanent carrying out of negotiation activities (i.e. intermediation activities) for contracts relating to a commercial enterprise or conclusion of such contracts on behalf of such commercial enterprise in a specific place or territory, without an ancillary role such as a commercial intermediary, mercantile agent, sales clerk or employee, shall be deemed to be an agent.”
In view of this definition, the main elements of an agency relationship may be briefly summarized as follows:
- The agent must negotiate and/or conclude contracts relating to a commercial enterprise;
- There must be an underlying agreement that constitutes the basis of the agent’s negotiation or contracting activities; and
- Such activities must show permanence and the agent must pursue these activities as a career.
In this respect, an agent carries out brokerage activities for businesses relating to the commercial enterprise of the principal, or performs such activities on behalf of the principal. The relationship between an agent and a principal is deemed as a form of “special representation”. A real person or legal entity agent is legally required to conduct the agency operation in compliance with the principal’s instructions and in a manner consistent with the interests of the principal.
The freedom of contract principle is also relevant for agency contracts. In the absence of a formal contractual arrangement, provisions on agency contracts laid down in the NTCC shall apply. In the cases where there is no provision in the articles of the NTCC on agency contracts, the provisions concerning occasional intermediaries under the new Code of Obligations No. 6098 (“NTCO”) will be applied to the commercial agencies who act as intermediaries, and the provisions concerning commissioners will be applied to the commercial agencies who conclude contracts; if there are no such provisions, then the provisions about representation will be applied.
Certain special topics regarding agency are regulated under other various codes. For example; insurance agencies are regulated in the Insurance Code and travel agencies are regulated in the Travel Agencies and Travel Agency Unions Code. The intermediaries who are agencies of brokerage houses in the purchase and sale of capital markets instruments are regulated under the Communiqué of the Capital Markets Board Regarding The Principles on Intermediary Activities and Intermediary Institutions, Serial: V, No: 46.
Legally Required Form for an Agency Contract
As per the general rule under the NTCO, the validity of a contract is not subject to any legal form, provided that a specific form is set forth as a validity requirement under a specific provision or law. As there are no specific laws requiring any such mandatory form (including the relevant provisions of the NTCC governing agency contracts) an agency contract may be entered into even in a verbal form. Notwithstanding the foregoing, as per the Civil Procedures Law No. 6100, a written document, i.e. a document signed by a principal and an agent, is required to prove the valid existence of a contract if the disputed amount exceeds TRL 2500 (app. Euro 1100), should there be any disputes regarding the agency relationhip.
Nonetheless, should a principal contemplate granting an agent the authority to execute contracts and other legal documents, to receive payments and to renew or decrease receivables on principal’s behalf, such power of attorney must be given in writing. Also, the authority to conclude contracts shall be registered and announced by the agent.
Rights and Obligations of an Agent
As indicated above, the parties are free to contractually agree on the rights and obligations of the agent. Even if there are no written contractual arrangements, it is possible to determine the basic rights and obligations of an agent under the provisions of the applicable laws.
- i. Obligations
Under the Turkish commercial and contracts law regime, an agent is required to:
- Conduct activities relating to the business of the principal within the territory. The principal is free to contractually limit such activities to a narrower extent than provided for in the legislation. Similarly, the principal may impose sales targets on its agents;
- Respect the principal’s interests e.g. show due care in selecting customers, monitoring the conditions of the market, etc.;
- Observe the duties of loyalty and trust, which duties cover the: (i) duty to notify the principal about all issues relating to the relationship between the principal and the agent, (ii) duty to act in accordance with the principal’s instructions to the extent that such instructions do not encroach on the independence of the agent, (iii) non-compete obligation, (iv) duty of confidentiality;
- Take preventive and/or protective measures in favor of the principal when necessary i.e. to seek remedies such as notifications for payment or protest, injunctive relief, evidence consideration etc., as may be required; and
- Remit all relevant payments and send the necessary documents to the principal in a timely fashion.
- ii. Rights
Under the Turkish commercial and contracts law regime, an agent is entitled to:
- Request payment of commission fees; an agent will be entitled to commission fees only after the customer duly pays the amount under its sales agreement with the principal;
- Unless otherwise agreed under the contract, carry out activities in a territory exclusively assigned;
- Claim compensation for extraordinary costs;
- Claim portfolio compensation for losing its clientele and suffering financial distress as a result of an unjust termination by the principal or valid termination by the agent; and
- If a non-competition obligation is set forth after the termination of the agreement, claim special compensation for non-compete.
Rights and Obligations of a Principal
The rights of the agent constitute the obligations of the principal, and the obligations of the agent constitute the rights of the principal, due to the synallagmatic nature of agency contracts. To clarify, the principal shall inform the agent regarding the offers that he does not accept, shall provide the documents regarding products, shall inform the agent on the issues necessary for him to fulfill his obligations, and especially shall notify if the volume of business will be less than expected and shall pay the necessary fees.
Authorities of an Agent and Unauthorized Representation
An agent is entitled to:
- Negotiate (intermediate) and/or conclude contracts on behalf and for the account of the principal; and on this basis, agents can be classified in two classes: (i) agents with the authority to conclude contracts on behalf and for the account of his principal, (ii) agents without the authority to conclude contracts on behalf and for the account of his principal;
- Represent the principal in respect of preventive and/or protective measures referred to above; which authority covers the right to represent the principal before courts; and
- Collect and receive payments in respect of the goods or services from third parties personally contracted by himself.
Pursuant to Article 108 of the NTCC, in cases where an agent acts without authority or exceeds the authority granted, the principal may immediately give consent to the relevant transaction negotiated and/or concluded by the agent. If such consent is not given, the agent will be responsible for the transaction on his own behalf and account.
Termination of Agency Contracts
Where agency contracts have an indefinite term, either party who requests to terminate the contract shall submit the request to terminate at least three months prior to the effective date of any contemplated termination. Agreements for a definite period of time shall automatically terminate upon lapse of the contractual term, unless the parties agree on an automatic renewal system. In any case, any party may rely on just grounds to immediately terminate the agency agreement.
Other than bankruptcy, death and restriction of capacity, which are referenced in the rules of the NTCO, incidents that may constitute just grounds for termination are not specifically defined in the NTCC; however, according to the Supreme Court of Appeal’s decisions, the following reasons may, inter alia, be considered as just grounds for termination of agency contracts:
In the event that one of the parties to the contract:
- Discontinues or becomes obliged to cease its activities for any reason for an unreasonable period;
- Engages in any activity causing harm to the other party, whether directly or indirectly; and
- Makes late payments in spite of written notice.
In addition, the parties to an agency contract may also mutually agree on other just grounds on the condition that such causes are not against the mandatory provisions of the law.
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 law regulating the goodwill indemnity (in other words “portfolio compensation”); the concept and grounds for goodwill indemnity had been established by Supreme Court of Appeals’ precedents.
In line with established practices of the Supreme Court of Appeals, in the event 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 a calculation is to leave the compensation amount to the court’s discretion, but limiting it with the average of the agent’s yearly net profit accrued during the previous five-year period.
Goodwill indemnity for agencies is specifically regulated under Article 122 of the NTCC. 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 previous five years. If the contract continued less than five years, then the yearly average of the whole activity period shall be taken into consideration. The NTCC specifically states that if the agent terminates the contract on its own or the producer company terminates the contract on just grounds, then the agent shall not be entitled to claim the goodwill indemnity. It must be noted that a provision in an agency contract establishing a waiver by the agent from the right to claim goodwill indemnity is not valid. In other words, even though the agency contract explicitly states that the agent will have no rights regarding any goodwill indemnity whatsoever, the court may still rule in favor of the agent asking for goodwill indemnity.
The claims must be raised within one year as of the termination of the agency contract.
Non-Competition Obligation and Indemnity
Pursuant to the NTCC, unless otherwise agreed in writing, the principal shall not appoint more than one agent at the same time within the same territory and same area for the same field of activity. Moreover, an agent shall not act on behalf of competitors who are located at the same place or region or are active in the same commercial area. In other words, the non-competition obligation shall apply to the agency during the term of the contract unless otherwise agreed by the parties.
On the other hand, under the law, the agent is not bound by a non-competition obligation after the term of the agency contract has ended. Another matter which is regulated by the NTCC for the first time, is the rules on non-competition agreements after the term of the contract which is set forth in Article 123. In order to limit the activities of an agent after the termination of the agency contract, the parties shall agree in writing and the agreement covering the rules of mutual understanding shall be signed by the principal and delivered to the agent. This kind of non-competition agreement can only be valid for an additional period of two years after the termination or expiry of the agency contract, and it can only be relevant to the territory covered by and customer group provided to the agent, and the subjects of the agreements that the agent is entitled to negotiate. The principal shall pay a reasonable compensation to the agent for the non-competition limitation. The principal may waive the non-competition limitation before the termination of the agency contract. In such an event, the principal will not be under the obligation to pay compensation after the passing of six months after the agent’s waiver. In the event that one of the parties terminates the contract on just grounds within one month of the termination date, such party can notify the other party in writing that it is not bound by the non-competition agreement. The arrangements contrary to the above rules will be invalid to the extent they are against the favor of the agent.
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Other Contents

The Turkish automobile and light commercial vehicle market left the 2000s behind with steadily rising sales figures and the 2010s with high and stable sales figures as well. In this period, the growth of the market was driven not only by high purchase power but also by easy access to credit and product diversity...

Turkish Commercial Code No. 6102 ("TCC") provides the right to exit from the company to the shareholders of limited liability companies and the right to squeeze out the shareholder from the company, unlike the structure of joint stock companies, with the exit and squeeze out institutions specially regulated for...

Turkish Commercial Code No. 6102 (“TCC”) preserves the rule that the board of directors shall manage and represent joint stock companies. The TCC regulates how the power of representation shall be exercised, the registration and announcement of the persons authorized to represent, the transfer of the...

Ordinary partnerships are regulated under Turkish Law between Articles 620 and 645 of the Turkish Code of Obligations No. 6098 (“TCO” or the “Code”). The Law defines an ordinary partnership contract as a contract where two or more persons undertake to combine their labour or property to achieve a common...

Merger and acquisition processes are one of the legal processes that most seriously affect the identities and legal status of companies. After the completion of legal, tax, financial and operational due diligence reports, the parties initiate the negotiation process in case they reach an agreement on proceeding with the...

A popular business model for expanding market reach and brand recognition worldwide is franchising. Despite being less common than distribution agreements in the form of mono-brand store agreements, franchising is another significant method for extending luxury brands' distribution networks. Luxury brands use...

In the decision dated 14.06.2022 and numbered 2019/149 E. 2022/894 K., the Court of Cassation General Assembly (“CCGA”) evaluated the theory of piercing the corporate veil in the context of the relationship between the guarantor and the borrowing company in a dispute arising from a loan agreement...

The European Union continues to be an important investment center for foreign investors. According to data from the European Commission's "Second Annual Report on the monitoring of foreign direct investment in the European Union", the European Union received €117 billion worth of foreign direct investment in...

Transfer of shares is arguably the first legal transaction that comes to mind among the legal transactions regarding the shares of a capital company, and the most common transaction in practice. However, the shares of a capital company may also be subject to various transactions, other than share purchase...

Law No. 6563 on the Regulation of Electronic Commerce (E-commerce Law or Law) has recently undergone a radical change in order to regulate the behavior of the players in the rapidly growing and developing e-commerce sector. The new regulations that came into force as of January 1, 2023 envisage important...

On 11 June 2021, the German Federal Parliament approved the German Supply Chain Due Diligence Act (Lieferkettensorgfaltsgesetz) (“Act”) which affects not only German entities but also their suppliers in foreign countries (including Turkish entities). The main focus of the Act, which entered into force on...

On 21 December 2007, the Federal Council approved the draft revision of the Swiss Code of Obligations, which also includes amendments to company law. On 28 November 2014, the Federal Council referred the draft revision for consultation. Following extensive discussions and a long enactment process, the...

The Turkish Commercial Code No. 6102 ("TCC") regulates maritime trade contracts under the fourth part of the fifth book of the Code. Among the types of contracts regulated in this section, the most frequently used contract in international maritime transport practice is the freight contract regulated under...

Prohibition on hidden income shifting is one of the most important issues that is broadly regulated under Capital Markets Law No. 6362 (“CML”). In conjunction with CML Article 21, which has a broader context than Article 15 of the abrogated Capital Markets Law No. 2499, another significant step has been taken...

As a result of developing commercial activities and large-scale investments, especially concluded in the fields of construction, energy and mining, companies are seeking to participate in these investments by uniting their powers and expertise to take advantage of financial opportunities together. This tendency...

The Turkish Commercial Code (“TCC” or “Law”) has enabled companies to apply different structural models and to implement new legal formations by including spin-off provisions to its Article 159 et seq. In accordance with the provisions of the law, companies may transfer a certain element, or elements, of their...

The International Federation of Consulting Engineers is a professional association established in 1913, known as the FIDIC (Fédération Internationale Des Ingénieurs-Counseils). Its members are duly elected from consultant-engineer associations of various countries, and membership to the association is...


Incoterms are a set of rules introduced by the International Chamber of Commerce (ICC) to explain the commercial terms that are widely used in international trade. The purpose of Incoterms rules is to facilitate and expedite international trade in a safe and secure manner...

The regulation applicable to all Turkish ports prepared by the Ministry of Transport, Maritime Affairs and Communications that entered into force after being published in the official gazette on October 31, 2012 (˝the Regulation˝), consolidates all the bylaws, regulations and instructions in a single Regulation...

As a rule, rights and obligations arising from an agreement have legal consequences only between the creditor and the debtor which are parties to the agreement. This principle is referred to as "privity of contract." In general, contracts for the benefit of third parties, where the fulfillment of an...

The rules of e-commerce, which grow and develop with the digitalizing world, are changing. E-commerce has become the driving force of the digital economy. However, considering the growth rate of e-commerce and the transformation it has undergone in a short time, it is obvious that some...

The dissolution of a company is a specific type of dissolution, which results in the cancellation of the legal personality which was gained by registration at incorporation. The specific proceeding which leads to the dissolution, and thus, the termination of a company upon the constitutive decision...

Companies in which shares or authority to manage is held by members of a family are considered to be “family businesses”. Family members can hold shares that control the company, as well as retain management authority. Having a family business means opportunity, security and income for...

Turkey ratified the Convention on the Contract for International Carriage of Goods by Road (“CMR”) in accordance with Act No. 3939 dated 7 December 1993, and the CMR entered into force in Turkey on 31 October 1995. In accordance with Article 1 / 1 of the CMR, the carriage of goods by road...

Ordinary partnerships are governed by Article 620 et seq. of the Turkish Code of Obligations No. 6098 (“TCO”). An ordinary partnership agreement is defined as an agreement whereby two or more persons undertake to join efforts and/or goods to reach a common goal...


The concept of disguised profit transfer in joint stock companies, in its broadest meaning, covers the transfer of company assets to related parties and may occur in different ways. This concept is regulated in detail under capital markets legislation...

Share subscription agreements, which are commonly encountered in start-up investments, set out the terms and conditions of an investor’s participation in a company as a shareholder by subscribing the new shares issued in a capital increase...

The electronic signature, which has the same legal consequences as wet signatures if it meets certain conditions, has taken its place in many legal systems and has enhanced commercial life. Although there are various types and applications in different legal systems...






























INCOTERMS are a set of rules introduced by the International Chamber of Commerce (ICC) to explain the commercial terms that are widely used in international trade. The purpose of the Incoterms rules is to contribute to and facilitate the safe and swift conduct of international trade...


















































































































