Distributor Agreements in Turkey
Dr. Kutlay Telli
Introduction
This article is intended to provide a comprehensive outline of distributorship agreements in Turkey. Undoubtedly, distributor agreements play a crucial role in developing a marketing business strategy for particularly large-scale corporations. Such contracts pave the way for reaching out to new markets for foreign investors in Turkey.
What are the main legal instruments applicable to distributor contracts in Turkey?
The lack of a regulation targeted at distributor agreements has been a matter of concern in Turkey. In practice, the provisions of Turkish Code of Obligations (Numbered 6098) on agency agreements and general principles of contract law apply to distributor contracts.
What does distribution agreement mean?
Because of the lack of any legislation regulating distributor agreements, it is hard to discuss a recognized definition of distribution agreement in Turkey. Under those circumstances, making a reference to key parameters of distribution contracts is very hard. In general, distribution agreements grant distributors in the designated territory to sell, promote and market relevant manufacturer’s produced products to customers and end-users under its own name and account.
What does the word distributor mean?
Generally speaking, distributor implies a person or organization supplying goods to markets or companies. Distributor is seen as an intermediary entity between a producer and a downstream marketing entity from the supply chain.
What are core aspects of a distribution agreement in Turkey?
It is worth underlining that the lack of specific provisions or a separate legislation has unintended consequences upon definition of distributorship. Additionally, the identification of applicable articles or any regulation is very challenging. This failure is worsened for dispute settlements arising from distribution agreements.
Moreover, a distributor contract is regarded as a form of vertical agreement. It means that if articles of the franchising agreement contain the prevention, distortion or restriction of competition, Article 4 of the Protection of Competition Act (Numbered 4054) shall be enforceable for the concerned distribution agreement. What is more, the Competition Authority may also take obligatory measures restricting competition and abuse of dominant position.
What are terms of distributor contracts?
It is essential to address potential advantages of the absence of any distributor-targeted regulation. The lack of any regulation dedicated to distributor contracts paves the way for the application of freedom of contract norms.
For instance, there is no clear obligation for parties about limitation period and duration of the distributor contract. Hence, the signatories are totally free to sign a contract for a fixed or indefinite duration. The principle of freedom of contract applies to distribution agreements so that parties are granted with full capacity to choose the type, subject and terms and conditions of the distributor contract within the context of limited restrictions prescribed by law. From that sense, it is helpful to review Article 27 of Turkish Code of Obligations (Numbered 6098) formulating three unlawful forms of agreements:
-agreements violating the law and imperative provisions of the law,
-agreements violating morality and public order,
-agreements violating individual rights.
What should a distribution agreement include?
A distribution agreement must be formulated very carefully. It is required to make clear references to the duration, termination and all relevant conditions of contract including rights and duties of the parties and dispute settlement articles.
Conclusion
To conclude, distribution contracts play a key role in finding new markets particularly for foreign investors. It must be reiterated that a distribution agreement is a sui generis type of agreement. Therefore, it is of utmost importance in preparing, concluding and signing such agreements. The principle of freedom of contract may pose several challenges together with its potential benefits to the dealers. The identification of responsibilities and the exercise of rights under the relevant contract depends on an in-depth study in advance.
Senior Lawyer| Consultant| Researcher|Certified Peer Reviewer
LLM Leicester University Faculty of Law, Leicester, UK
Visiting Scholar Fordham University Faculty of Law, New York, USA
After his graduation from the Faculty of Law in Ankara, he received his second master’s degree from the Leicester University Faculty of Law, UK in 2008. He delivered lectures in Fordham School of Law in the USA. He completed his dissertation research for an associate professor degree in New York. He speaks Turkish, French and English very fluently.
He has extensive experience in different branches of public and private international law. He has been engaging in legal matters within the framework of national and international firms and institutions such as the Turkish Council of State and the United Nations for 15+ years.
He wrote four books and numerous articles in journals with referees (mostly in English) dedicated to existing and emerging legal challenges and their effective solutions. Dr. Telli has a great capacity to produce legal documents, articles, reports and all related contents in particularly English and Turkish. He plays a considerable role in a number of leading international peer reviewed journals as referee. He also has extensive experience in negotiation techniques and diplomacy. Currently, Dr. Telli delivers legal and business consultation to foreign companies on their investment projects in Turkey. He is married with two children.
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