{"id":27294,"date":"2025-03-05T04:24:17","date_gmt":"2025-03-05T01:24:17","guid":{"rendered":"https:\/\/ozansoylu.av.tr\/how-to-prepare-an-international-construction-contract-in-turkey\/"},"modified":"2025-11-10T10:38:01","modified_gmt":"2025-11-10T07:38:01","slug":"how-to-prepare-an-international-construction-contract-in-turkey","status":"publish","type":"post","link":"https:\/\/ozansoylu.av.tr\/en\/how-to-prepare-an-international-construction-contract-in-turkey\/","title":{"rendered":"How to Prepare an International Construction Contract in Turkey?"},"content":{"rendered":"<div class=\"&quot;font-claude-message\">\n<p>International construction contracts prepared in Turkey are complex legal texts at the intersection of different countries&#8217; legal systems, technical standards, and commercial practices. In the preparation process of these contracts, many critical elements need to be carefully evaluated, from the legal capacity of the parties to the choice of applicable law, from dispute resolution methods to technical specifications. A properly prepared international construction contract plays a key role in the successful completion of the project and in preventing possible disputes.<\/p>\n<div>\n<div class=\"grid-cols-1 grid gap-2. 5 [&amp;_&gt;&lt;p&gt;_*]:min-w-0\">\n<h2 class=\"font-600 text-xl font-bold\">What is an International Construction Contract?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">If the parties to a contract have different nationalities or residences in different countries, or if the subject matter of the contract, service, or payments cross the borders of a country, that contract is international in nature. Additionally, contracts that do not carry foreign elements in terms of personal or geographical aspects or are not connected to multiple legal systems also have an international character to the extent that they concern international trade and\/or international investment.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">What are the Basic Characteristics of International Construction Contracts?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">International construction contracts are generally high-value, long-term, and complex projects. One party is usually a foreign government entity, and the other party is a contracting company or companies with headquarters in another country. Frequently, the employer is a public institution of a developing country, while the contractor is a company from an industrialized country.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">What are the Main Elements to Consider When Preparing International Construction Contracts?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The main elements include ensuring the parties have the capacity to enter into contracts, preparing the contract in written form, selecting the applicable law, determining the dispute resolution method, ensuring clear and precise contract language, defining force majeure situations, and determining risk distribution.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How is the Contracting Capacity of the Parties Determined?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The parties to an international construction contract must have the capacity to enter into contracts according to their own national laws. Whether the parties are competent or not should be evaluated according to the foreign legal system to which they are subject. Especially:<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>The legal capacity and capacity to act of natural persons:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Subject to the law of the country of their citizenship<\/li>\n<li class=\"whitespace-normal break-words\">Determined according to the law of the country of domicile or habitual residence<\/li>\n<li class=\"whitespace-normal break-words\">According to Article 8 of the Turkish Private International Law and Procedural Law, the capacity of natural persons is subject to their national law<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>The legal capacity and capacity to act of legal entities (companies):<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Subject to the law of the place where the administrative center is located<\/li>\n<li class=\"whitespace-normal break-words\">Determined according to the law of the place of establishment<\/li>\n<li class=\"whitespace-normal break-words\">According to Article 8\/4 of the Turkish Private International Law and Procedural Law, the capacity of legal entities is subject to the law of the administrative center in their statute<\/li>\n<li class=\"whitespace-normal break-words\">Turkish Law is applied to the capacity of foreign legal entities whose actual administrative center is in Turkey<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">It is important to know whether the parties have active and passive litigation capacity and who the authorized organs or persons are for representation and incurring debts. Especially in contracts with foreign state institutions, it is necessary to explicitly state in the contract that the counterparty waives judicial immunity. Therefore, it is of great importance for the parties to examine each other&#8217;s authorization documents or signature circulars during the negotiation phase or at the time of contracting.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<div class=\"&quot;font-claude-message\">\n<div>\n<div class=\"grid-cols-1 grid gap-2. 5 [&amp;_&gt;&lt;p&gt;_*]:min-w-0\">\n<h2 class=\"font-600 text-xl font-bold\">What are the Formal Requirements in International Construction Contracts?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">Although contracts are not subject to any form in principle, it is important that international construction contracts are prepared in writing and in detail. This can prevent future disputes and reduce proof problems.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The construction contract made between the landowner and the contractor in exchange for land must be made in official form for validity, as it aims to transfer real estate ownership. Indeed, a contract containing the obligation to transfer immovable land to the contractor must be made in official form to be valid.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">In case of contracting in an electronic environment, a secure electronic signature should be used. However, legal transactions that laws subject to official form or a special ceremony, as well as guarantee contracts, cannot be carried out with a secure electronic signature.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">In practice, parties make large and important construction contracts in writing and even in official form. In contracts made with electronic data interchange (EDI) or fax text, since there are often no signatures in the texts or the signatures are not original, especially such signed texts are copies; in terms of procedural law, they are only considered a beginning of evidence. It is not possible to accept signature photocopies as valid signatures according to our law.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">Additionally, the formal requirements of the country where the contract is made and the country where it will be performed should be taken into account. Because sometimes the formal requirement provided in the law of the place of performance may serve entirely to protect public order, and contracts in different forms may not be considered valid.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">Why is the Choice of Applicable Law Important?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The choice of law applicable to the contract determines how issues not regulated in the contract will be resolved, the scope of the rights and obligations of the parties, and which legal system will be applied in case of a dispute. When this choice is not made, in case of a dispute, the judicial authority will determine the applicable law according to its own conflict of laws rules.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">What are the Basic Obligations of the Contractor in International Construction Contracts?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The basic obligations of the contractor are:<\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Performing the work personally or having it performed under their management<\/li>\n<li class=\"whitespace-normal break-words\">Performing the work with loyalty and care<\/li>\n<li class=\"whitespace-normal break-words\">Providing the necessary tools and equipment<\/li>\n<li class=\"whitespace-normal break-words\">Starting and continuing the work on time<\/li>\n<li class=\"whitespace-normal break-words\">Covering damages<\/li>\n<li class=\"whitespace-normal break-words\">Delivering the work on time<\/li>\n<li class=\"whitespace-normal break-words\">Obligation to inform the owner<\/li>\n<\/ul>\n<h2 class=\"font-600 text-xl font-bold\">What are the Basic Obligations of the Owner?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The basic obligations of the owner are:<\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Paying the price of the work<\/li>\n<li class=\"whitespace-normal break-words\">Providing the necessary materials<\/li>\n<li class=\"whitespace-normal break-words\">Informing about dangerous situations of the material or the item left for repair<\/li>\n<li class=\"whitespace-normal break-words\">Inspecting the work<\/li>\n<li class=\"whitespace-normal break-words\">Notifying if there are defects<\/li>\n<\/ul>\n<h2 class=\"font-600 text-xl font-bold\">How is the Subcontracting Relationship Regulated?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The subcontracting agreement is by nature a construction contract, and the main contractor makes this contract not on behalf of the owner but in their own name and account. The subcontractor acts as an independent, not dependent, assistant of the main contractor and has certain professional expertise in the subject they have undertaken.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The main contractor does not have the authority to supervise and oversee the subcontractor. However, according to some views, it is possible for the subcontractor to work under the management and supervision of the main contractor if it is agreed in the contract or required by the nature of the work.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The owner has no right to give instructions to the subcontractor, nor does the owner have any right to demand from the subcontractor to produce and deliver the work. The owner can make claims against the subcontractor only according to tort provisions if the conditions are met.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The subcontractor&#8217;s obligation to create and deliver the construction work is not to the owner but to the main contractor. Since there is no contractual relationship between the owner and the subcontractor, the owner has no obligation to pay any fee to the subcontractor.<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>In the main contractor&#8217;s liability to the owner for the actions of the subcontractor:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">The subcontractor is considered the auxiliary person of the main contractor<\/li>\n<li class=\"whitespace-normal break-words\">The main contractor is liable if they are at fault in selecting or instructing subcontractors<\/li>\n<li class=\"whitespace-normal break-words\">The main contractor can escape liability for the subcontractor&#8217;s action only by proving that they could not be considered at fault if they had committed such an action themselves<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">The subcontractor can use the statutory lien right against the owner for the fee receivable from the main contractor due to working on the building constructed on the owner&#8217;s land, and can request the registration of this right. This right exists regardless of whether the assignment of the work to the subcontractor is permissible or not.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<div class=\"&quot;font-claude-message\">\n<div>\n<div class=\"grid-cols-1 grid gap-2. 5 [&amp;_&gt;&lt;p&gt;_*]:min-w-0\">\n<div class=\"font-claude-message pr-4 md:pr-9 relative leading-[1. 65rem] [&amp;_pre&gt;&lt;p&gt;div]:bg-bg-300 [&amp;_. ignore-pre-bg&gt;div]:bg-transparent [&amp;_pre]:-mr-4 md:[&amp;_pre]:-mr-9\">\n<div>\n<div class=\"grid-cols-1 grid gap-2. 5 [&amp;_&gt;&lt;p&gt;_*]:min-w-0\">\n<h2 class=\"font-600 text-xl font-bold\">How are Force Majeure and Unexpected Circumstances Regulated?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The regulation of force majeure and unexpected circumstances in international construction contracts is of great importance.<\/p>\n<p>These situations should be regulated as follows:<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Situations that can be considered force majeure:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Wars<\/li>\n<li class=\"whitespace-normal break-words\">Civil disturbances<\/li>\n<li class=\"whitespace-normal break-words\">Rebellions and uprisings<\/li>\n<li class=\"whitespace-normal break-words\">Strikes<\/li>\n<li class=\"whitespace-normal break-words\">Floods<\/li>\n<li class=\"whitespace-normal break-words\">Fires<\/li>\n<li class=\"whitespace-normal break-words\">Earthquakes<\/li>\n<li class=\"whitespace-normal break-words\">Extraordinary increases in raw material prices<\/li>\n<li class=\"whitespace-normal break-words\">Unexpected changes in the world&#8217;s political and economic circumstances<\/li>\n<li class=\"whitespace-normal break-words\">Unexpected excessive inflation or devaluations<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>With &#8220;hardship clauses&#8221; to be included in the contract:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Events that can be considered force majeure or unexpected circumstances can be limited<\/li>\n<li class=\"whitespace-normal break-words\">Future reliance by the parties on events outside these conditions as force majeure can be prevented<\/li>\n<li class=\"whitespace-normal break-words\">It can be determined whether the contract will be terminated or continued by adapting to changing conditions<\/li>\n<li class=\"whitespace-normal break-words\">It can be agreed whether these situations will impose compensation or refund obligations on the parties<\/li>\n<li class=\"whitespace-normal break-words\">It can be regulated whether these situations will constitute a cause for extension of time<\/li>\n<li class=\"whitespace-normal break-words\">Who will adapt the contract to new conditions (an impartial third person, the arbitrator or state court looking at the main case) can be determined<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">Additionally, parties can regulate these situations by referring to the International Chamber of Commerce&#8217;s (ICC) Force Majeure and Hardship Code No. 421 in their contracts. National legal systems recognize the validity of hardship clauses included in contracts.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">According to Article 117 of the Turkish Code of Obligations, events that are objectively impossible to avoid or eliminate and make the performance of the contract impossible are called &#8220;force majeure.&#8221; Although there are no general provisions and principles regarding unexpected circumstances, termination of the contract or adaptation to changing conditions can be requested based on the &#8220;principle of good faith&#8221; in the Civil Code.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">If arbitration has been chosen for the resolution of disputes, hardship clauses must be included in the contract. This is because arbitrators interpret the parties&#8217; failure to include provisions in their contracts to ensure the adaptation of contractual provisions to unexpected new conditions, while they had the possibility to do otherwise, as a deliberate silence.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"absolute -bottom-0 -right-1. 5\">\n<div class=\"border-0. 5 border-border-300 flex items-center translate-y-1\/2 rounded-lg shadow-sm transition bg-bg-000 p-1\">\n<div class=\"text-text-400 flex items-stretch justify-between gap-0. 5\">\n<div class=\"flex gap-0. 5\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<h2 class=\"font-600 text-xl font-bold\">How is the Contract Language Determined?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">Preparing the contract in a language that both parties know in common is the most appropriate method. Today, for practical reasons, <strong>English is mostly preferred<\/strong> as the language of international commercial and economic contracts.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How is the Dispute Resolution Method Determined?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">Alternative resolution mechanisms are particularly needed in resolving disputes arising from international construction contracts. The judicial authority to be applied in case of dispute should be clearly stated in the contract. In this context:<\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">The court of the state in which one of the parties is a national can be chosen as the judicial authority<\/li>\n<li class=\"whitespace-normal break-words\">An international institutional arbitration court can be preferred<\/li>\n<li class=\"whitespace-normal break-words\">An ad hoc arbitration court can be designated<\/li>\n<li class=\"whitespace-normal break-words\">When arbitration is chosen as the way to resolve disputes, it should be taken into account that if there is no explicit provision in the contract, the adaptation of the contract to changing conditions by the arbitrators or its termination cannot be accepted as easily as in official courts<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Particularly important issues:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Mechanisms should be provided to ensure that disputes related to construction projects can be resolved quickly, if possible at the site when they arise<\/li>\n<li class=\"whitespace-normal break-words\">The execution of the final decision in the country where the parties&#8217; assets and receivables are located should be considered<\/li>\n<li class=\"whitespace-normal break-words\">Harmony should be ensured between the chosen judicial authority and the applicable law<\/li>\n<li class=\"whitespace-normal break-words\">Issues such as the place of arbitration, language of arbitration, applicable arbitration rules, and number of arbitrators should be clearly stated<\/li>\n<li class=\"whitespace-normal break-words\">If one of the parties is a state or state institution, the issue of judicial immunity should be specially regulated<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">In addition, alternative dispute resolution methods such as mediation and conciliation can be provided for in the contract, and a condition can be imposed that litigation or arbitration cannot be resorted to without resorting to these methods. This can ensure the continuation of commercial relations between the parties and reduce litigation costs.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">What are FIDIC Contracts?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">These are standard contract forms prepared by FIDIC (F\u00e9d\u00e9ration Internationale des Ing\u00e9nieurs-Conseils). There are different types of contracts for construction works, electrical and mechanical works, design-build, and turnkey projects.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How is the Payment Method Determined?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">In international construction contracts, parties can freely decide on the payment method within the framework of the foreign exchange regime of the payment country. In practice, the following payment methods are mainly used:<\/p>\n<ol class=\"-mt-1 list-decimal space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\"><strong>Letter of Credit:<\/strong> One of the most secure payment methods, it is a system in which banks mediate and protect both parties.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Advance Payment:<\/strong> This is a payment made at the beginning of the work, usually applied as a certain percentage of the total price.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Documentary Payment:<\/strong> This is a system where payment is made against the submission of specified documents.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Payment Against Goods:<\/strong> These are payments made against the completion of certain stages of the work.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Barter:<\/strong> These are payments made through the exchange of mutual goods or services.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Acceptance Credit Payment:<\/strong> This is a system that provides the opportunity for deferred payment.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Joint Account:<\/strong> These are payments conducted through a joint account.<\/li>\n<\/ol>\n<p class=\"whitespace-pre-wrap break-words\"><strong>When determining the payment method in the contract, the following issues should be considered:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Foreign exchange regime restrictions of countries<\/li>\n<li class=\"whitespace-normal break-words\">Financial situation and credibility of the parties<\/li>\n<li class=\"whitespace-normal break-words\">Size and duration of the project<\/li>\n<li class=\"whitespace-normal break-words\">Financing sources (international credit institutions, etc.)<\/li>\n<li class=\"whitespace-normal break-words\">Tax and fee obligations<\/li>\n<li class=\"whitespace-normal break-words\">Exchange rate risks and protection methods<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">In addition, the currency in which payments will be made, how exchange rate changes will be managed, interest rates to be applied in case of delay, and if there are conditions and guarantees regarding advance payments should also be clearly regulated in the contract.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">What are the Termination Cases of Construction Contracts?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The reasons for terminating a construction contract can be detailed as follows:<\/p>\n<ol class=\"-mt-1 list-decimal space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\"><strong>Termination by Performance:<\/strong> The contract ends due to performance when the contractor completes and delivers the construction that it has undertaken to build on time, in accordance with the contract and without defects, and the owner fully pays the contracted fee on time.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Exceeding the Estimated Cost:<\/strong> If the estimated cost, which was approximately determined in advance with the contractor, is exceeded excessively without the influence of the owner, the owner has the right to withdraw from the contract both during the construction and after the completion of the construction.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Unilateral Termination by the Owner:<\/strong> The owner can unilaterally terminate the contract before the completion of the construction work, provided that it pays the price of the completed part and compensates the contractor&#8217;s entire loss. In this case, the owner does not need to have a just cause.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Impossibility:<\/strong> If the performance of the construction work has become impossible (if the work has perished) as a result of an unexpected event or an action of the owner or contractor, the construction contract ends.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Contractor&#8217;s Withdrawal from the Contract:<\/strong> The contractor can withdraw from the contract if the owner fails to fulfill its obligation to provide materials or land or to pay the fee, or if the owner fails to accept the construction work presented to it by the contractor.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Contractor&#8217;s Default:<\/strong> If the contractor does not start the work on time or delays the performance of the work contrary to the contract, or if, without the fault of the owner, the construction is delayed to such an extent that it will not be possible to complete it on time despite all predictions, the owner can withdraw from the contract without waiting for the time specified for delivery.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Defective Performance:<\/strong> If the construction work is severely defective or contrary to the contract to such an extent that the owner cannot use it and cannot be forced to accept it according to the rules of equity, the owner can withdraw from the contract either by refusing to accept the construction work or after accepting the work.<\/li>\n<li class=\"whitespace-normal break-words\"><strong>Extraordinary Circumstances:<\/strong> If extraordinary events that could not be foreseen in advance or were foreseen but not taken into account by both parties emerge later and prevent or extremely complicate the construction of the work, the judge, using his discretionary power, either increases the agreed fee (i.e., adapts the contract to the changing conditions) or terminates the contract.<\/li>\n<\/ol>\n<p class=\"whitespace-pre-wrap break-words\">Each of these termination cases affects the rights and obligations of the parties in different ways, and it is important to clearly regulate the consequences of these situations in the contract.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">Why is the Use of Standard Contract Forms Important?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">Standard forms provide a common understanding between parties familiar with different legal systems, shorten the negotiation process, and ensure uniformity in practice. Standard forms prepared by organizations such as FIDIC, ICE, World Bank are widely used.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How is Contract Financing Arranged?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">For financing international construction projects, which generally involve large amounts, loans can be obtained from international organizations such as the World Bank, International Development Agency, European Investment Bank. In this case, it is necessary to comply with the standard forms and rules of the relevant organization.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How Are Guarantees Arranged?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">Types of guarantees used in international construction contracts are generally grouped under three main headings:<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Bid Bonds:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">These are guarantees taken to ensure that the bidding company does not withdraw its offer or avoid signing the contract<\/li>\n<li class=\"whitespace-normal break-words\">Determined as a certain percentage of the bid price<\/li>\n<li class=\"whitespace-normal break-words\">Valid until the bid is concluded<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Performance Bonds:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">These are guarantees that the contractor will complete the work in accordance with the contract<\/li>\n<li class=\"whitespace-normal break-words\">Determined as a certain percentage of the contract price<\/li>\n<li class=\"whitespace-normal break-words\">Generally valid until final acceptance<\/li>\n<li class=\"whitespace-normal break-words\">The quality of the work and timely completion are guaranteed<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Advance Payment Bonds:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">These are guarantees taken for advance payments made by the owner<\/li>\n<li class=\"whitespace-normal break-words\">Issued for the amount of the advance<\/li>\n<li class=\"whitespace-normal break-words\">Released in proportion to the use of the advance in the work<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">In the arrangement of these guarantees, the standards set in the International Chamber of Commerce&#8217;s (ICC) brochure titled &#8220;Uniform Rules for Contract Guarantees&#8221; are widely used. The following aspects of guarantees should be clearly regulated in the contract:<\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Form and content<\/li>\n<li class=\"whitespace-normal break-words\">Validity periods<\/li>\n<li class=\"whitespace-normal break-words\">Compensation conditions<\/li>\n<li class=\"whitespace-normal break-words\">Release conditions<\/li>\n<li class=\"whitespace-normal break-words\">Qualifications of the guaranteeing institution<\/li>\n<li class=\"whitespace-normal break-words\">Language of guarantee letters<\/li>\n<li class=\"whitespace-normal break-words\">Applicable law and related matters<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">Additionally, since guarantee letters from local banks are often required in public tenders in developing countries, the difficulties that international contractors may experience in this regard should be taken into account, and counter-guarantee mechanisms should be established if necessary.<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>For effective use of guarantees, necessary organization should be made regarding:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Timely submission of guarantees<\/li>\n<li class=\"whitespace-normal break-words\">Regular monitoring of periods<\/li>\n<li class=\"whitespace-normal break-words\">Obtaining extensions when necessary<\/li>\n<li class=\"whitespace-normal break-words\">Fulfillment of release conditions<\/li>\n<li class=\"whitespace-normal break-words\">Taking precautions against the risk of unfair compensation<\/li>\n<\/ul>\n<h2 class=\"font-600 text-xl font-bold\">How is Work Control and Supervision Carried Out?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The owner or the consulting engineer acting on behalf of the owner controls whether the work is carried out in accordance with the contract and technical specifications. The scope and manner of using the control authority should be clearly stated in the contract.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The owner may give various direct or indirect instructions to the contractor during the construction of the work. These instructions may be related to:<\/p>\n<ol class=\"-mt-1 list-decimal space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">The construction work itself<\/li>\n<li class=\"whitespace-normal break-words\">The manner in which the construction work is carried out<\/li>\n<li class=\"whitespace-normal break-words\">Materials to be used in construction<\/li>\n<li class=\"whitespace-normal break-words\">Selection of subcontractors<\/li>\n<\/ol>\n<p class=\"whitespace-pre-wrap break-words\">The contractor is obliged to personally create the construction work they have undertaken or to have it done under their management. This obligation is based on the idea that the contractor&#8217;s personality, personal ability and competence are important in the construction contract.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The provision in the law regarding the contractor&#8217;s obligation to perform the work personally or have it done under their management is not mandatory. The parties can agree otherwise. For example:<\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">The contract may stipulate that all or part of the construction work be given to a subcontractor<\/li>\n<li class=\"whitespace-normal break-words\">Giving the work to a subcontractor may be completely or partially prohibited in the contract<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">The supervision and control authority of the owner or the consulting engineer acting on their behalf covers ensuring that the work is carried out in accordance with technical specifications and projects, performing quality control, and monitoring compliance with the work program. How these authorities will be exercised, which tests will be performed, approval and acceptance procedures should be regulated in detail in the contract.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How is Material Supply Arranged?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The parties can freely determine in the construction contract which party will be responsible for providing raw materials such as sand and stone, and semi-finished materials such as iron, cement, and lime to be used in the construction of the work. Land and plans are not considered materials in this sense.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">In a regular construction contract, the owner provides the material, while the contractor creates the construction work. In a construction work delivery contract, the contractor both provides the material and creates the construction work. Since it is understood from the relevant articles of the Code of Obligations that the obligation to provide material belongs to the owner as a rule, in case of doubt, the contractor&#8217;s obligation to provide material should be rejected.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The contractor is responsible for the material they provide according to the provisions of warranty against defects and encumbrances. If the material is provided by the owner, the contractor must take care of this material, use it carefully and protect it, and immediately notify the owner upon detecting defective material. If material remains at the end of the work, the contractor is obliged to return the remaining material to the owner.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The obligation to insure the material used in construction belongs to the owner in principle. However, if otherwise stipulated in the contract, the obligation to insure may belong to the contractor. In addition, in urgent cases where the material is exposed to a special danger, the contractor must insure the material on behalf of the owner at the owner&#8217;s expense.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The contractor is obliged to account to the owner regarding the material. The parties can determine the details of this accounting obligation in the contract. The contractor is obliged to return the remaining material provided by the owner at the end of the work. Remaining material refers to any material that is not an integral part of the constructed work.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">If it is discovered during the performance of the work that the material provided by the owner or the land given by them is defective, or if situations arise that endanger the proper or timely execution of the construction work, the contractor is obliged to notify the owner immediately, otherwise they will have to bear the negative consequences themselves.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How is the Work Program Prepared?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The work program is one of the most critical elements of international construction contracts and should be prepared to include the following details:<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The start and end dates of the work should be clearly defined. Intermediate terms and critical dates should be clearly defined in the contract. Procedures for preparing and updating the work program should be specified in detail.<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>For delay cases:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Scope and amount of penalties<\/li>\n<li class=\"whitespace-normal break-words\">Method of calculating delay damages<\/li>\n<li class=\"whitespace-normal break-words\">Daily, weekly, or monthly delay penalties<\/li>\n<li class=\"whitespace-normal break-words\">Total delay penalty limit<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Situations where time extensions can be granted:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Force majeure<\/li>\n<li class=\"whitespace-normal break-words\">Delays caused by the owner<\/li>\n<li class=\"whitespace-normal break-words\">Delays caused by administrative authorities<\/li>\n<li class=\"whitespace-normal break-words\">Unexpected physical obstacles<\/li>\n<li class=\"whitespace-normal break-words\">Work increases and changes<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">Additionally, bonuses to be given in case of early completion should also be regulated in the contract. The relationship between the work program and progress payments, cash flow projections, and mobilization program are also important parts of the work program.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The work program should be updated periodically, and how these updates will be made, approval procedures, and the obligations of the parties should be clearly stated in the contract. The critical path method should be used in program updates, and delays and acceleration measures should be reflected in the program.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How Are Change Requests Managed?<\/h2>\n<p>The owner&#8217;s authority to request changes, notification of change requests, evaluation process, determination of price and time effects should be clearly regulated in the contract.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How Are Temporary and Final Acceptance Arranged?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The construction work that has been completed and created in accordance with the contract must be delivered by the contractor to the owner. For immovable construction works, a registration process is carried out in the land registry before delivery.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">If the owner unjustly refuses to accept the construction work, they become in default according to the provisions of the creditor&#8217;s default. In this case, works that can be deposited may be deposited by the contractor.<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>With the delivery of the construction work:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Benefits and damages on the work pass to the owner<\/li>\n<li class=\"whitespace-normal break-words\">The owner&#8217;s obligation to inspect and notify arises<\/li>\n<li class=\"whitespace-normal break-words\">The contractor&#8217;s payment claim becomes due<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">The parties determine the delivery time of the construction work in the contract. In practice, it is observed that parties make penalty clause and bonus agreements regarding delivery time. Thus, the contractor will be obliged to pay a penalty if the construction work is not delivered at the agreed time. On the other hand, if the contractor delivers the work before the agreed date, the owner will be obliged to pay the agreed bonus.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The contractor&#8217;s responsibilities continue during the warranty period that begins after provisional acceptance. The contractor is obliged to remedy defects that appear during this period. With the final acceptance to be made at the end of the warranty period, the contractor&#8217;s warranty responsibility ends. However, liability for hidden defects continues.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The contractor must transfer the ownership of the constructed work to the owner and must diligently perform the obligations arising from the construction contract and protect the interests of the owner.<\/p>\n<div class=\"font-claude-message pr-4 md:pr-9 relative leading-[1. 65rem] [&amp;_pre&gt;&lt;p&gt;div]:bg-bg-300 [&amp;_. ignore-pre-bg&gt;div]:bg-transparent [&amp;_pre]:-mr-4 md:[&amp;_pre]:-mr-9\">\n<div>\n<div class=\"grid-cols-1 grid gap-2. 5 [&amp;_&gt;&lt;p&gt;_*]:min-w-0\">\n<h2 class=\"font-600 text-xl font-bold\">How Are Testing and Commissioning Procedures Arranged?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">In international construction contracts, especially in industrial facility constructions, testing and commissioning procedures should be arranged in detail. In this context:<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Technical Inspection of the Work:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Inspections to be carried out by the owner or consulting engineer on behalf of the owner<\/li>\n<li class=\"whitespace-normal break-words\">Test methods to be applied at each stage<\/li>\n<li class=\"whitespace-normal break-words\">Evaluation and reporting of test results<\/li>\n<li class=\"whitespace-normal break-words\">Procedures to be followed in case of non-compliance<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Performance Tests:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Guaranteed performance values<\/li>\n<li class=\"whitespace-normal break-words\">Test conditions and acceptance criteria<\/li>\n<li class=\"whitespace-normal break-words\">Test durations and repeat tests<\/li>\n<li class=\"whitespace-normal break-words\">Performance penalties and bonuses<\/li>\n<li class=\"whitespace-normal break-words\">Evaluation of test results<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Commissioning Process:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Mechanical completion phase<\/li>\n<li class=\"whitespace-normal break-words\">Cold tests (operating systems without load)<\/li>\n<li class=\"whitespace-normal break-words\">Hot tests (operating systems with load)<\/li>\n<li class=\"whitespace-normal break-words\">Personnel training<\/li>\n<li class=\"whitespace-normal break-words\">Preparation of operation and maintenance documents<\/li>\n<li class=\"whitespace-normal break-words\">Provision of spare parts and consumables<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">The responsibilities of the parties during the testing and commissioning process, raw materials and auxiliary materials to be used, energy supply, personnel assignment, and similar matters should also be clearly specified. In addition, solution procedures for delays, malfunctions, and non-compliances that may arise during this process should be defined in the contract.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"absolute -bottom-0 -right-1. 5\">\n<div class=\"border-0. 5 border-border-300 flex items-center translate-y-1\/2 rounded-lg shadow-sm transition bg-bg-000 p-1\">\n<div class=\"text-text-400 flex items-stretch justify-between gap-0. 5\">\n<div class=\"flex gap-0. 5\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<h2 class=\"font-600 text-xl font-bold\">How Are Occupational Safety and Environmental Protection Arranged?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">Occupational safety and environmental protection issues are important components of international construction contracts. Especially after 2003, these issues have gained more importance with the Equator Principles accepted by the world&#8217;s largest financial institutions. These principles aim to ensure that construction projects financed by lending institutions develop in a socially responsible and environmentally sound manner.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">Obligations regarding occupational safety and environmental protection should be regulated in detail in contracts. In this context, national and international standards to be complied with, the environmental legislation of the host country, and regulations regarding occupational health and safety should be clearly stated. In addition, environmental impact assessment reports, occupational safety risk analyses, and responsibilities related to these should also be included in the contract.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">Although the contractor&#8217;s capacity to influence environmental aspects in traditional construction activity is limited by the technical criteria and conditions determined by employers and their consulting engineers, today environmental and social standards have become important criteria in providing international financing. Therefore, environmental protection measures, waste management, noise control, protection of air quality and similar issues should be regulated in detail in contracts, and sanctions to be applied in case of non-fulfillment of these obligations should be clearly stated.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How Are Insurance Obligations Arranged?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The obligation to insure the materials used in construction belongs to the owner in principle. However, if the contract stipulates otherwise, the obligation to insure may belong to the contractor. Especially in urgent cases where the material is exposed to a special danger, the contractor must insure the material on behalf of the owner at the owner&#8217;s expense.<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Insurance obligations in international construction contracts should be arranged under the following headings:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">All-risk insurance (construction insurance against all risks)<\/li>\n<li class=\"whitespace-normal break-words\">Employer&#8217;s liability insurance<\/li>\n<li class=\"whitespace-normal break-words\">Third-party liability insurance<\/li>\n<li class=\"whitespace-normal break-words\">Professional liability insurance<\/li>\n<li class=\"whitespace-normal break-words\">Transport insurance<\/li>\n<li class=\"whitespace-normal break-words\">Workers&#8217; insurance<\/li>\n<li class=\"whitespace-normal break-words\">Machinery and equipment insurance<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>In insurance policies:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Insurance amounts<\/li>\n<li class=\"whitespace-normal break-words\">Insurance period<\/li>\n<li class=\"whitespace-normal break-words\">Coverage scope<\/li>\n<li class=\"whitespace-normal break-words\">Deductibles<\/li>\n<li class=\"whitespace-normal break-words\">Insurance premium payment obligation<\/li>\n<li class=\"whitespace-normal break-words\">Damage notification and compensation procedure<\/li>\n<li class=\"whitespace-normal break-words\">Selection of insurance company<\/li>\n<li class=\"whitespace-normal break-words\">Co-insured parties<\/li>\n<li class=\"whitespace-normal break-words\">Recourse rights<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">such matters should be clearly stated. In addition, validity conditions of policies, renewal procedures, and procedures to be performed in case of cancellation should also be regulated in the contract.<\/p>\n<div class=\"font-claude-message pr-4 md:pr-9 relative leading-[1. 65rem] [&amp;_pre&gt;&lt;p&gt;div]:bg-bg-300 [&amp;_. ignore-pre-bg&gt;div]:bg-transparent [&amp;_pre]:-mr-4 md:[&amp;_pre]:-mr-9\">\n<div>\n<div class=\"grid-cols-1 grid gap-2. 5 [&amp;_&gt;&lt;p&gt;_*]:min-w-0\">\n<h2 class=\"font-600 text-xl font-bold\">How Are General and Special Specifications Prepared?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">The preparation of general and special specifications in the international construction sector is an important issue and should be prepared according to certain principles:<\/p>\n<p class=\"whitespace-pre-wrap break-words\"><strong>General Specifications:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">A modern tender system should start with an effective pre-qualification assessment of applicants<\/li>\n<li class=\"whitespace-normal break-words\">A tender procedure based on high-quality tender documents should be followed<\/li>\n<li class=\"whitespace-normal break-words\">It should contain balanced contract terms that fairly distribute potential future risks between the employer and the contractor<\/li>\n<li class=\"whitespace-normal break-words\">Internationally recognized standard contract forms such as FIDIC can be taken as a basis<\/li>\n<li class=\"whitespace-normal break-words\">General specifications may differ according to the type of project (construction works, electrical-mechanical works, design-build works, etc.)<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Special Specifications:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Contains special conditions and requirements specific to the project<\/li>\n<li class=\"whitespace-normal break-words\">Technical specifications should be specified in detail<\/li>\n<li class=\"whitespace-normal break-words\">Materials to be used, standards, and quality requirements should be clearly defined<\/li>\n<li class=\"whitespace-normal break-words\">Work schedule, performance criteria, and acceptance conditions should be clearly determined<\/li>\n<li class=\"whitespace-normal break-words\">Compliance with local legislation and standards should be observed<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\"><strong>Compatibility of Specifications:<\/strong><\/p>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">General and special specifications should not contradict each other<\/li>\n<li class=\"whitespace-normal break-words\">A hierarchy between specifications should be determined<\/li>\n<li class=\"whitespace-normal break-words\">Specifications should be compatible with other documents of the contract<\/li>\n<li class=\"whitespace-normal break-words\">Technical terminology should be used consistently<\/li>\n<li class=\"whitespace-normal break-words\">Expressions that may lead to ambiguity and different interpretations should be avoided<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">Specifications prepared according to international standards are critically important for the successful execution of the project and prevention of possible disputes.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"absolute -bottom-0 -right-1. 5\">\n<div class=\"border-0. 5 border-border-300 flex items-center translate-y-1\/2 rounded-lg shadow-sm transition bg-bg-000 p-1\">\n<div class=\"text-text-400 flex items-stretch justify-between gap-0. 5\">\n<div class=\"flex gap-0. 5\"><\/div>\n<\/div>\n<\/div>\n<\/div>\n<h2 class=\"font-600 text-xl font-bold\">How Are Contract Annexes Arranged?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">In international construction contracts, contract annexes are considered an integral part of the contract and are of great importance. These annexes generally include detailed documents such as technical specifications, projects, drawings, work schedule, price schedules, quantities, unit price descriptions, quality standards, organization chart, and key personnel list. In the preparation of contract annexes, special attention should be paid to ensure that they are compatible with the main contract and that there are no contradictions within themselves.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">In case of contradiction between contract annexes, it should be clearly stated in the contract which document will be applied with priority. Generally, this order of priority is arranged as: main contract text, special technical specification, general technical specification, projects, unit price descriptions, and other annexes.<\/p>\n<p>translate the entire text without changing anything, preserving HTML tags and using CODE BLOCK:<\/p>\n<p>In addition, issues such as how new projects will be added in case of changes to projects, and which will prevail in case of conflict with existing projects, should also be regulated in the contract.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">The procedure to be followed when changing contract annexes or adding new annexes, authorized persons and approval authorities should also be specified in the contract. Especially in long-term projects, since it may be necessary to make changes to the annexes due to technological developments or changing needs, how this process will be managed should be planned in advance. Making all changes in writing and signing by the parties is important in terms of preventing possible disputes.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">How to Ensure Control of the Employer&#8217;s Financial Status?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">Controlling the employer&#8217;s financial status is critical in large-scale international construction projects. Generally, the employer, especially if it is a public institution of a developing country, will not be able to or prefer not to finance the construction project from its own resources. In this case, the following ways are followed for project financing:<\/p>\n<ol class=\"-mt-1 list-decimal space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\"><strong>Obtaining Credit from International Financial Institutions:<\/strong><\/li>\n<\/ol>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">World Bank (International Bank for Reconstruction and Development- IBRD)<\/li>\n<li class=\"whitespace-normal break-words\">International Development Association (International Development Association-IDA)<\/li>\n<li class=\"whitespace-normal break-words\">European Investment Bank (European Investment Bank-EIB)<\/li>\n<li class=\"whitespace-normal break-words\">European Development Fund (European Development Fund-EDF)<\/li>\n<\/ul>\n<ol class=\"-mt-1 list-decimal space-y-2 pl-8\" start=\"2\">\n<li class=\"whitespace-normal break-words\"><strong>Providing Financial Guarantees:<\/strong><\/li>\n<\/ol>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Bid guarantees<\/li>\n<li class=\"whitespace-normal break-words\">Performance guarantees<\/li>\n<li class=\"whitespace-normal break-words\">Repayment guarantees<\/li>\n<li class=\"whitespace-normal break-words\">Letter of credit arrangements<\/li>\n<li class=\"whitespace-normal break-words\">Bank guarantee letters<\/li>\n<\/ul>\n<ol class=\"-mt-1 list-decimal space-y-2 pl-8\" start=\"3\">\n<li class=\"whitespace-normal break-words\"><strong>Contractual Measures:<\/strong><\/li>\n<\/ol>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Determining the rights to be granted to the contractor in case payments are not made on time<\/li>\n<li class=\"whitespace-normal break-words\">Obligation to periodically report the employer&#8217;s financial status<\/li>\n<li class=\"whitespace-normal break-words\">Right to stop work in case the employer fails to fulfill financial commitments<\/li>\n<li class=\"whitespace-normal break-words\">Termination rights in case of payment difficulties<\/li>\n<li class=\"whitespace-normal break-words\">Identification of alternative financing sources<\/li>\n<\/ul>\n<ol class=\"-mt-1 list-decimal space-y-2 pl-8\" start=\"4\">\n<li class=\"whitespace-normal break-words\"><strong>Regular Financial Audit:<\/strong><\/li>\n<\/ol>\n<ul class=\"-mt-1 list-disc space-y-2 pl-8\">\n<li class=\"whitespace-normal break-words\">Periodic control of the employer&#8217;s financial situation<\/li>\n<li class=\"whitespace-normal break-words\">Regular audit of project financing<\/li>\n<li class=\"whitespace-normal break-words\">Monitoring whether payments are made on time<\/li>\n<li class=\"whitespace-normal break-words\">Early detection of financial risks and taking necessary measures<\/li>\n<\/ul>\n<p class=\"whitespace-pre-wrap break-words\">Clearly regulating these control mechanisms in the contract is of great importance for the financial sustainability of the project.<\/p>\n<h2 class=\"font-600 text-xl font-bold\">What Are the Issues to Consider in Contract Negotiations?<\/h2>\n<p class=\"whitespace-pre-wrap break-words\">In international construction contract negotiations, it must first be ensured that the parties have the capacity to enter into contracts. For this purpose, it is of great importance that the parties examine each other&#8217;s authorization documents or signature circulars during the negotiation phase or at the stage of concluding the contract. Parties have to evaluate the existence of the legal capacity of the counterparty according to the foreign legal system to which they are subject.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">As soon as an agreement is reached on the essential elements of the contract, a confirmation letter bearing the signatures of the persons authorized to represent and bind the parties should be exchanged. According to Article 23 of the Turkish Commercial Code, the confirmation letter enables verbal agreements or agreements made by telephone, telegraph or telefax to be bound to a written text. If no objection is made to the confirmation letter within a certain period, the text of the letter acquires the quality of a written contract between the parties.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">During the negotiations, the most appropriate method is to prepare the contract in a language known jointly by the parties. Today, English is mostly preferred for practical considerations as the language of international commercial and economic contracts. In addition, it is important to make confidentiality agreements in the negotiations, to keep regular minutes of the negotiations and to clearly determine the binding nature of preliminary agreements.<\/p>\n<p class=\"whitespace-pre-wrap break-words\">In contract negotiations, the methods of resolving disputes that may arise in the future (court or arbitration) should also be clearly determined. Especially if one of the parties is a state or state institution, the issue of judicial immunity needs to be clarified and necessary waiver declarations should be obtained. In addition, the enforceability of the decisions of the chosen dispute resolution method in the countries where the parties&#8217; assets and receivables are located should also be taken into consideration.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<div class=\"&quot;font-claude-message\">\n<div>\n<div class=\"grid-cols-1 grid gap-2. 5 [&amp;_&gt;&lt;p&gt;_*]:min-w-0\">\n<p>For more assistance or consultation on this matter, you can <span style=\"color: #573503;\"><a style=\"color: #573503;\" href=\"https:\/\/ozansoylu.av.tr\/en\/contact\/\">contact us.<\/a><\/span><\/p>\n<div id=\"attachment_26320\" style=\"width: 415px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/ozansoylu.av.tr\/en\/atty-ozan-soylu\/\" rel=\"attachment wp-att-26320\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-26320\" class=\" wp-image-26320\" src=\"https:\/\/ozansoylu.av.tr\/wp-content\/uploads\/2025\/02\/Atty.-Ozan-SOYLU-300x212.png\" alt=\"\" width=\"405\" height=\"286\" srcset=\"https:\/\/ozansoylu.av.tr\/wp-content\/uploads\/2025\/02\/Atty.-Ozan-SOYLU-300x212.png 300w, https:\/\/ozansoylu.av.tr\/wp-content\/uploads\/2025\/02\/Atty.-Ozan-SOYLU.png 691w\" sizes=\"auto, (max-width: 405px) 100vw, 405px\" \/><\/a><p id=\"caption-attachment-26320\" class=\"wp-caption-text\">How to Prepare an International Construction Contract in Turkey?<\/p><\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>International construction contracts prepared in Turkey are complex legal texts at the intersection of different countries&#8217; legal systems, technical standards, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":27297,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[229],"tags":[],"class_list":["post-27294","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-law"],"aioseo_notices":[],"aioseo_head":"\n\t\t<!-- All in One SEO Pro 4.9.8 - aioseo.com -->\n\t<meta name=\"description\" content=\"Legal and technical elements that should be considered in international construction contracts prepared in Turkey.\" \/>\n\t<meta name=\"robots\" content=\"max-image-preview:large\" \/>\n\t<meta name=\"author\" content=\"Soylu\"\/>\n\t<meta name=\"google-site-verification\" content=\"B4h4C8kBFJ7EFsnAzZt2JRZ3bG4RXqFne2Ygy7QraPc\" \/>\n\t<meta name=\"msvalidate.01\" content=\"718F6D6060DA00B8182C2D7FE6076F1D\" \/>\n\t<meta name=\"yandex-verification\" 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