Agency Contract in Turkish Law – Adv. Ozan Soylu

In Turkish legal system, individuals may sometimes find themselves unable to perform certain legal transactions, legal-like actions, or material acts personally due to lack of knowledge, inexperience, or impossibility. In such situations, they may seek assistance from a trusted and expert person to handle these matters. This is where an agency contract (vekalet sözleşmesi) comes into play between the person requesting the service and the person performing it.

Similar to relationships between patients and doctors, or clients and lawyers, all agency contracts in Turkey impose various rights and obligations on the parties and are frequently encountered contracts in practice.

 

What is an Agency Contract Under Turkish Law

An agency contract in Turkish law is established based on a special trust relationship between the agent and the principal. The agent undertakes to perform a task or carry out a transaction in the best interest of the principal. This contract type is fundamentally regulated under the Turkish Code of Obligations (Türk Borçlar Kanunu – TBK) Article 502.

The agency contract is defined as a contract where the agent undertakes to perform a task or execute a transaction for the principal. This legal framework provides the foundation for understanding how agency relationships function within Turkey’s legal system.

Parties and Formation of the Contract

The agency contract is established between the agent (vekil) and the principal (vekalet veren). The principal is the person who requests that their business be conducted or transaction be performed by the agent. The agent is the person who undertakes to perform the principal’s business in accordance with their interests.

Parties can establish an agency contract through mutual and corresponding declarations of will. According to TBK Article 503, an agency contract can also be established through implicit declarations of will. Under this provision, persons who have official capacity regarding the performance of work, persons whose profession requires performing such work, or persons who announce that they will accept such work are deemed to have concluded a contract unless they reject the proposal within a reasonable time.

 

Characteristics of Agency Contracts in Turkey

Work Performance Contract Nature

An agency contract is fundamentally a work performance contract. The agent undertakes a performance obligation through the agency contract, performs the principal’s work, and works in their interest. Non-performance obligations or refraining from certain acts are not considered work performance and do not fall within the scope of agency contracts.

Personal rights that are closely tied to individuals, such as engagement, marriage, or adoption, cannot be the subject of agency contracts. These transactions must be performed personally by the individual.

Trust Relationship Requirement

There exists a trust relationship between the agent and the principal. This trust relationship is mutual. The principal entrusts the work to the agent based on trust in the agent’s personality, professional knowledge, or experience. The agent also expects the principal to provide complete and accurate information.

Result-Independent Responsibility

In agency contracts under Turkish law, the agent is not responsible for the result but for the performance of the act. This means it is necessary and sufficient for the agent to show the required care while performing the undertaken work. The fact that the result is not as desired by the principal does not constitute a breach of the agency contract.

 

Remuneration in Turkish Agency Contracts

Remuneration is not a mandatory element of agency contracts, and these contracts can be established free of charge. According to TBK Article 502/3, if the parties have agreed in the agency contract that remuneration will be given, or if there is a custom that the principal will pay remuneration as a result of the work being performed, then the agent may request remuneration for the work performed.

In agency contracts established between lawyers and clients in Turkey, even if remuneration is not agreed upon, the lawyer is entitled to remuneration according to the Turkish Bar Association Law. If remuneration is agreed to be paid in the contract but the principal terminates the contract without justifiable cause while the work is being performed, the agent is entitled to remuneration even if the work is not completed.

 

How to Prepare an Agency Contract in Turkish Law

Agency contracts are generally not subject to any formal requirements. However, Turkish law has introduced formal requirements for certain special situations. For example, written form requirements exist for credit letters and credit orders, which are types of agency contracts, and official form requirements are sought for agency contracts related to the sale and purchase of real estate.

As can be seen, formal requirements vary according to the nature of the contract, and a separate agency contract should be prepared for each specific case. Agency contracts should include parties, scope of agency, subject and nature of the work to be performed, and remuneration if agreed upon. Since these will vary according to each specific case, obtaining legal assistance will prevent disputes that may arise between the parties in the future.

Duration of Power of Attorney

In agency contracts, parties can determine the duration as they wish. If no duration is foreseen, the contract is indefinite.

 

Types of Agency Contracts in Turkey

Agency contracts can be established for the performance of all kinds of work or a group of works, as well as for performing a specific task.

General Power of Attorney is a general authority given to the agent for the performance and conclusion of multiple tasks. Special Power of Attorney is a special authority given to the agent exclusively for the performance and conclusion of one task.

For example, when the principal appoints a person as agent for purchase or sale matters, a general power of attorney is in question, while a power of attorney prepared only for the purchase or sale of a specific real estate is a special power of attorney.

Special Authorization Requirements

The agent must be specifically authorized by the principal for the following situations under Turkish law:

• Making peace agreements
• Applying to arbitration
• Requesting bankruptcy, postponement of bankruptcy, and concordat
• Making exchange commitments
• Making donations
• Becoming a guarantor
• Transfer of real estate and limitation with a right

If the agent is not given explicit authority for a transaction requiring special authorization, the agent has no obligation to perform this transaction.

 

Rights and Obligations of Parties Under Turkish Law

Agent’s Obligations

The agent has several key obligations under Turkish agency contract law:

Performance in accordance with the principal’s will and instructions is the primary obligation. According to TBK 505/1, the agent must comply with the explicit instructions given by the principal. However, in situations where the agent cannot obtain permission, if it is clear that the principal would give permission if they knew the situation, the agent may deviate from the instructions.

Personal performance obligation requires the agent to perform the work personally as a rule. Since the principal trusts the agent’s personality, professional knowledge, and experience, according to TBK Article 506, the agent is obliged to perform the work personally. However, in some cases, the agent can have the work done by someone else.

Duty of care and diligence requires the agent to show the care expected from them according to the ordinary course of business in order to achieve the performance result. When determining the responsibility of the duty of care, the care that a prudent agent performing similar work should show is taken into consideration.

Loyalty obligation means the agent must act honestly and show loyalty while performing the work. The agent’s loyalty obligation begins with the performance of the work and continues even after the contract ends.

Accounting obligation arises with the establishment of the agency relationship between the parties. The agent must give an account to the principal upon request or when necessary regarding how the work will be carried out, changes related to the work while performing it, or financial matters.

Principal’s Obligations

The principal’s obligations under Turkish agency contract regulations include:

Remuneration payment obligation exists when remuneration is agreed upon in the contract or when there is a custom to pay remuneration to the agent. Expense and advance payment obligation requires the principal to reimburse the agent for expenses incurred and advances paid while performing the work.

Obligation to release the agent from assumed debts means the principal must remedy the damages that the agent assumed while performing the work.

 

Termination of Agency Contracts in Turkish Law

Agency contracts can be terminated by the will of one of the contracting parties, as well as in cases such as death of one of the parties, loss of legal capacity, or bankruptcy.

Unilateral Termination

Since this type of contract is based on a trust relationship, according to TBK Article 512, both the agent and the principal can terminate the contract unilaterally at any time. Unilateral termination by the agent is called resignation, and unilateral termination by the principal is called dismissal.

It is sufficient for the party wishing to terminate the contract to express this will clearly. No formal requirement is sought. Written form is preferred for proof purposes. If the agency contract is terminated without justifiable cause at an inappropriate or unsuitable time for the other party, the terminating party must compensate for the damage suffered by the other party.

In case of unilateral termination, the agent is generally entitled to fair compensation rather than the full remuneration. However, if a lawyer is dismissed without justifiable cause or resigns with justifiable cause, they are entitled to the full remuneration according to the Turkish Bar Association Law.

Termination Due to Death, Incapacity, or Bankruptcy

The agency contract generally terminates upon death of the agent or principal. If it is agreed in the contract that it will not terminate upon death of one of the parties, the contract does not terminate. Especially in cases of the principal’s death, it is seen that the parties agree on performing certain transactions after death.

If either party loses legal capacity or goes bankrupt, the agency contract generally terminates as a rule. However, a contrary arrangement can be agreed upon. In case of the principal’s bankruptcy, it is possible for the agent to perform transactions on matters that do not concern the assets.

 

Frequently Asked Questions About Agency Contracts in Turkish Law

Can agency relationships be established for all types of transactions? No. Turkish law has regulated that certain rights can only be exercised by the person themselves and cannot be subject to another person’s agency. These are called rights closely tied to the person, with basic examples being marriage and engagement.

Does the agent guarantee results in agency contracts? No. The agent has no obligation to achieve results. They have an obligation to demonstrate the attention, care, and dedication required to achieve this result.

Can agency contracts be established free of charge? Yes. The remuneration element is not a mandatory element for agency contracts. Therefore, agency contracts can be established free of charge.

Is there a time limit in agency relationships? No. Within the scope of freedom of contract, parties can agree on agency relationships for any period they wish. They can also be established indefinitely.

Are there formal requirements for agency contracts? No. As a rule, there are no formal requirements for agency contracts. This means they can even be made verbally. However, formal requirements may be sought for certain special and exceptional situations.

 

Important Considerations for Agency Contracts in Turkey

Agency contracts, being work performance contracts based on trust relationships, make the relationship between the contracting parties extremely important. When preparing agency contracts under Turkish law, careful attention should be paid to clearly defining the scope of authority, obligations of parties, termination conditions, and remuneration terms.

The Turkish legal framework provides comprehensive protection for both agents and principals through detailed regulations in the Turkish Code of Obligations. Understanding these provisions is crucial for anyone entering into agency relationships in Turkey, whether as a principal seeking representation or as an agent undertaking to perform services for others.

Proper legal guidance is recommended when drafting agency contracts to ensure compliance with Turkish law requirements and to prevent potential disputes between parties. The complexity of agency relationships and the various obligations they create make professional legal assistance particularly valuable in the Turkish legal context.

 

Expert Legal Guidance for Agency Contracts

At Soylu Law Firm, we specialize in providing comprehensive legal services for agency contracts and international document management. Our team has extensive experience working with foreign clients and handling cross-border legal matters, including apostille services and international document authentication.

We understand the complexities of Turkish contract law and guide both principals and agents through the intricacies of agency relationships.

Whether you need assistance drafting agency agreements, managing international legal documentation, or resolving contract disputes, our firm offers practical solutions tailored to your specific needs in Turkey’s legal framework.

 

For more assistance or consultation on this matter, you can contact us.