Agency law is governed by the Turkish Commercial Code numbered 6102 (“TCC”). The TCC – which came into force on July 1st, 2012 – brought the Turkish law into conformity with contemporary commercial applications and, in large part, with the European Union law.
Definition of Agency
According to Article 102 of the TCC, agents act as intermediaries in agreements concerning the principal or execute such agreements on behalf of the principal on a continuous and contractual basis within a specific geographical area or territory (without possessing a legal status of commercial representatives, trade agents, sales officers or company employees).
Nevertheless, as per Article 107 of the TCC, agents are not authorized to execute agreements on behalf of the principal unless and until a special and written permission to that effect is granted.
Rights and Obligations of Agents
Agents are obliged to perform the business of the principal in their assigned territories and to protect the principals’ interests. Unless agents prove they were not at fault, they are liable for any damages to the principals’ goods or properties held by the same. They are further obliged to inform the principals – in due time – of the market conditions in their assigned territories as well as the financial conditions of the customers therein in addition to any changes in their conditions and all other issues which are of concern to the principals. Agents are also responsible for depositing or delivering the monies belonging to the principals and in case of any failures to effect such payments; they shall be liable to pay interest to accrue thereon in addition to compensation, if so required.
On the other hand, conditions which are contrary to various provisions stipulated in the TCC shall be invalid if they are to the detriment of the agents. Agents are further entitled to receive all documents from the principal regarding the goods and the principals shall notify the agents if the volume of business shall be less than expected. Furthermore, in addition to the remuneration of the agents as explained herein below, agents are also entitled to claim extraordinary expenditures and interests to accrue thereon.
During the term of the agency agreement, agents are entitled to commission on transactions concluded as a result of their efforts or with third persons acquired by the same for transactions of the same nature. In addition, where an agent is assigned with a specific territory or a group of customers, such agent shall also be entitled to commission – even if such transactions are concluded without his/her efforts. Pursuant to the termination of the agency agreement, agents shall be entitled to commission if they act as intermediaries in the transactions or the transactions are mainly attributable to their efforts and were entered into within a reasonable period as of the termination of the agreement or if the orders of the third parties have been received prior to the termination of the agency agreement. The referred commissions may be shared with the subsequent agents if equitable to be shared according to the circumstances.
The commissions shall become due at the time and to the extent the transaction is executed. Even if it becomes definitive that the principal shall not fulfil the contracts – which the agents acted as intermediaries regarding their execution- in full or in part, the agents may still claim commission. Agents shall not be entitled to commission only if and to the extent; the contracts shall not be fulfilled due to reasons not attributable to the principal. The commissions which are due shall be paid at the latest within the three months as of the execution of the transaction at issue and in any case, on the date of the termination of the agency agreement.
In the absence of any provisions in the agency agreement as to the amount of remuneration, agents shall be entitled to the commissions to be ascertained according to the customary practice and if there is no such customary practice, the remuneration shall be determined by the commercial court of first instance at the place where the agents carry out their activities.
Termination of the Agency Agreement
Where an agency agreement is concluded for an indefinite period, either party may terminate it by giving notice of three months whereas an agency contract for a fixed term which is continued to be performed after the expiration of the fixed period shall be deemed to be converted into an agreement for an indefinite term. The party terminating the agency agreement without just cause or without abiding by the three months’ notice period shall be obliged to compensate the other party for the losses incurred in the works which have been commenced yet could not be completed.
After the termination of the agency agreement, an agent may claim reasonable compensation from the principal in the following cases:
The amount of the compensation may not exceed the average of the annual commissions or other payments of the last five years. In the event that the contractual relation lasted shorter than five years; the average of the preceding years’ remuneration shall be taken into account.
An agent cannot claim compensation within this scope if (s)he has terminated the agreement or the agreement is terminated by the principal due to default of the agent in question. The claim for compensation as summarized hereunder cannot be waived in advance and compensation should be claimed within one year as of the termination of the agency agreement.
As can be perceived from the above summary on agency law in Turkey, the TCC harmonized the regulations regarding the agents with the Council Directive 86/653/EEC in many respects.
agentlaw.co.uk wishes to thank Bati Lawyers & Advisors of Istanbul for its contribution to this page.