Matters That Need To Be Considered In Contracts Are As Follows

Matters that need to be considered in contracts;

Identification of the Parties in the Contract

This topic may seem easy in first look but in practice lots of mistakes are made about this. If the parties of the contract are natural persons, T.C. identify number, their contacts and copy of their identity should be added to the contract. On the other hand, if parties of the contract are legal entity; copy of authorized signatures list, MERSIS number, tax register and trade register numbers, contact information`s, tax plate should be added to the contract.

If the parties of the contract are ordinary share than we should write the participants of the ordinary share one by one. Because ordinary shape does not have legal entity, so parties of the contract not the legal ordinary share but the partners who create a partnership. One more partnership which do not have any legal entity is community of heirs.

So, if at least one party of the contract is community share we should also print name of participants one by one.

Research of Power of Attorney

Within the commercial companies, there are people who represent them and hold the signing authority on behalf the company. It should be checked who the representative of the commercial company which is a party to the contract , and a circular of signature must be requested from the person in question. Signature circular is a certificate of representation. The important points which we should double check on the signature circular is company giving the authority to represent, authorized person for signature, scope of authority and validity period.


We can divide contracts in two groups contracts that imposes obligations on both parties and unilateral contracts. For example, trade contract impose obligation to pay on the one side and obligation to give the goods to the other. And we can exemplify unilateral contracts with deed of gift. So, in this case we should first identify with which group of contracts we deal with. If the contract in question is a unilateral contract than only signature of the obliged is enough. But if contract in question imposes obligations on both parties, we should have signs of both sides on the contract. As a rule, signature should be made by hand, but it also can be an electronic signature. Electronic signature, cannot be used in legal transactions subject to official form or a special ceremony, guarantee contracts, receipts, warrants, issuance and endorsement of bills of exchange.

Definitions in Contracts

Sometimes we see that some concepts are specifically defined in contracts. When the contract is examined by a third party, it can be easily seen that the parties have agreed on a definition with a common will. Sometimes the concepts put into contracts can be used outside of their general meanings.

Subject of the Contract

In this topic firstly we should have a word about legal characteristic. Legal characteristic is the criterion taken as a basis when determining which legal rules will be applied to the legal relationship in question. The subject of the contract is important in terms of determining the legal characteristic of the contract. In the subject part of the contract, the main acts undertaken by the parties should be explained. For example, in trade contract two main obligations is make the payment and supply the goods.

Debts of the Parties

Of course the basic principle in contracts is freedom of contract. Everyone is free to determine the party, content and conditions of the contract. But a mistake made while determining the debts can invalidate the contract. Firstly contract can not be contrary to law, contarct which was made unlawfully invalid as a rule. And aslo debt of the creditor in contract should not be impossible. For example nobody can make a contract about buying

Van Gogh’s next painting. Because Van Gogh pasted away years ago there will not be the next painting so performance of the contract is certainly impossible and thats why contarct will be invalid. Also contract cannot be contrary to personal rights. Nobody can make a contract about working 24 hours a day, cause this contract contrary to persona rights even if parties will sign the contarct like this it will be invalid. And for last, contract can not be contrary to morals.

Interest Rates

In fact, we can define interest as the rental price of money. Considering the period in which the interest was born, we can divide it into two groups; default interests and principal interest. Principal interest is the interest paid during the deprivation of money by the creditor. Default interest is the interest that has fallen into default and started to accrue against the debtor when the performance is not fulfilled on time, despite the time for performance.

While default interest can be charged to principal interest, as a rule, default interest cannot be charged to default interest. There is exception for this rule in eightg article of Commercial Law of the Republic of Turkey.

Determination of Interest Rate in Commercial Business

Basic rules which stated in Comercial Law of Turkey Republic are; free determenation of interest rates in commercial business (article 8), implementation of the provisions of the relevant legislation on principal and default interest (article 9), considering the business regulated in the commercial code as commercial business even if it does not concern a commercial enterprise and considering all legal transactions and acts concerning a commercial enterprise as commercial business. İf one partie of the contract is consumer, in other words if consumer make a contract outside of his professional or commercial activity, even if other partie is trader this contract should be caunted as consumer affairs. Because of this in this kind of situation the articles of the Law on Consumer Protection are applied with priority.

Current Legislation Regarding Principal Interest Rate

If parties not specified rate of principal interest in contract, current rate which stated in certain code will applied. If principal interest rate will determine by the contract, rate can not be more than 50% than rate stated in Law on Statutory Interest and Default Interest in Turkey.

In commercial affairs, if the principal interest rate is not determined in the contract, the principal interest will still be applied as 9%, the periodic rates determined by the Central Bank regarding the advance interest are considered in the calculation. Whether the rate of principal interest not determined in the contract, parties can determine rate 13.5% mostly. Rate over than 13.5% will be invalid.

Current Legislation Regarding Default Interest Rate

Unless otherwise stated in the contract, for noncommercial business default interest will be 9%. Default interest rate which will be applied for commercial business, the interest rate applied by the Central Bank for advance interest is applied as 15.75% since 31.12.2021.

According to the Law on Statutory Interest and Default Interest, if Central Bank make change in short-term advance interest middle of the year and difference between old rate and new rate at least five-point new rate will apply immediately. If difference between rates less than five points than old rate will apply until end of the year

Limit on Default Interest

If default interest rate does not specify in contract then rate which stated in Law on Statutory Interest and Default Interest in Republic of Turkey will be applied. The annual default interest rate to be determined in the contract cannot exceed one hundred percent of the annual interest rate determined in the legislation.

If we talk about the default interest in non-commercial business, if there is no such clause in the contract, the default interest is calculated as 9% per annum. If parties stated annual default interest rate in contract, this rate can not be over 18%. If parties stated default interest rate more than 18%, part which more than 18% will be invalid.

Who Will Pay Taxes and Other Expenses?

According to Stamp Tax Law 3 Clause, the signer of the contract is responsible for stamp duty. If stamp tax not paid then person who presented the contract to authorities for any process responsible for stamp tax. If the contract is changed, and the contract value increases, the increased amount is also subject to tax at the same rate. If contract will convey, then tax is charged at the rate of 4/1 of the tax collected. And finally, in case of extension of the contract, the same rate of tax is charged.

What Should Be Considered While Determining Penal Clause?

The penal clause is a condition that the parties can add to the contract in order to pay a certain amount of money to the creditor as a result of the debtor’s failure to fulfill or fail to fulfill the obligation undertaken. If judge find the penal clause overrated than he may reduce the price which stated in penal clause. The existence of the damage not a condition for take a payment based on penal clause.

Turkish Code of Obligations at clause 179 stated that if there is no proper performance, the performance of the debt or the penalty may be demanded. This rule is not mandatory so if there is clause at contract penalty and performance of the debt may be demanded at the same time.