I. Introduction
Following the post-1980 economic
policy change, the Turkish business environment has experienced an enormous
shift because of import liberalization, the opening of the Turkish economy to
the globe and high interest rates. Additionally, Turkey is surrounded by the
Mediterranean Sea, Aegean Sea and Black Sea. Because of its strategic location
and all other advantages, there has been a growing interest in starting a
business within the jurisdiction of Turkey.[1]
Undoubtedly, distributor agreements play a crucial role in developing a
marketing business strategy for particularly large-scale corporations. This
article is intended to provide a comprehensive outline of distributorship
agreements in Turkey. In terms of methodology, academic literature will be
assessed properly. 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. Nonetheless, for the purpose of this work, distributor
will be used to mean “a supplier and|or manufacturer”[2] granting
distributors in a certain territory to sell, promote and|or market the
manufacturer’s goods to customers, shops and companies under the name and
account of the distributor.
II. The Applicable Rules to Distributorship Agreements in
Turkey
It is fundamental to understand the
significance of the distributorship agreements for entrepreneurs.[3]
Distributor agreements are of great importance in bringing manufacturers and
sellers within different jurisdictions. Such contracts pave the way for
reaching out to new markets for foreign investors in Turkey.[4]
Nevertheless, the lack of a certain regulation targeted at distributor
agreements has been a matter of concern in Turkey. Distribution agreements have
not been defined by the Turkish legal system.[5] Legal
practitioners face several challenges in the absence of a clear legal framework
on the subject matter.[6] It
is worth underlining that the absence 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.
In this section, the question of
which norms are enforceable will be systematically reviewed by this article. In
practice, the provisions of Turkish Code of Obligations (Numbered 6098) on
agency agreements and general principles of contract law apply to distributor
contracts. Additionally, it is clear to argue that internationally recognized
principles are also applicable to distributorship clauses in Turkey. Firstly,
the distributor is accepted to operate as a separate entity by acting in his
account and under his/her name within the context of distributor agreement.[7]
Secondly, contrary to agency agreements, ‘the
What is more, the Competition Authority may also take obligatory
measures restricting competition and abuse of dominant position.[8]
It is essential to address potential advantages of the absence of any
distributor-targeted regulation. Indeed, 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.
Nonetheless, it is necessary to
emphasize that freedom of contract clauses present risky aspects. From that
sense, 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, duties and obligations of the parties.
What is more, it is necessary to clearly formulate dispute settlement
articles.
Conclusion
Under the influence of the changing
economic landscape, there have been dramatic changes in the types of start-up
agreements all over the world. 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.
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. In the light of the foregoing observations, it is of utmost
importance in preparing, concluding and signing such agreements in due
diligence.
[1] ‘On the grounds of many reasons, including a growing
economy, increasing youth population, cheaper and qualified labor force, low
tax liabilities on corporations and incentive opportunities, Turkey has been
found attractive by particularly foreign investors’: Kutlay Telli, Handbook for
Foreign Entrepreneurs on Turkey Investment Strategies (Legal, Istanbul 2023), 1
[2] See among others Official Website of LexisNexis Glossary,
<https://www.lexisnexis.co.uk/legal/glossary/distribution-agreement> accessed 19 October 2023
[3] For an end-to-end analysis of distributorship agreements
for international sales see inter alia Jon R. Bauman, ‘International Sales
Representative and Distributorship Agreements’ (1978) 4 North Carolina Journal
of International Law and Commercial Regulation 141
[4] Regarding
to the point observations on Turkey’s investment environment, see also Kutlay
Telli, ‘Guidance on Investing in Turkey’ (LegalBlog, 1 February 2023), <https://legal.com.tr/blog/genel/guidance-on-investing-in-turkey-turkiye/> accessed 18 February 2023
[5] Ali
Yurtsever, ‘Unpacking Distributor Agreements In Turkey: What Every Business
Should Know’, Mondaq, <https://www.mondaq.com/turkey/dodd-frank-consumer-protection-act/1373770/unpacking-distributor-agreements-in-turkey-what-every-business-should-know> accessed 21 October 2023
[6] Telli (n 1), 22
[7] See among others, Sneha Solanki, ‘Distribution
Agreement’, Official Website of LegaMart, <https://legamart.com/articles/distribution-agreement/> accessed 21 October 2023
[8] See
generally e.g. Guidelines on Vertical Agreements (Turkish Competition
Authority, Ankara, Date is not given)
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