Agents of Foreign Companies in Turkey

Since the last decade due to the increase in FDI which is positively affected by GDP growth, Turkey has attracted many investors from all around the world. While some of those investors were looking for opportunities to set up their organizations some run their business through the agencies based in Turkey. In this regard we need to provide more information about the legal framework of agency agreements in Turkish law aiming to reveal risks in legal documentation for agencies in Turkey.

Pursuant to the article 102 of the Turkish Commercial Law, the agency refers to a person mediating for contracts, business or profession of the merchant (or the company) in a specific territory or region whom not acting dependently as commercial agent, commercial representative, salesperson or employees of the company.

This definition applies those whom are authorized to get in an agreement i) to his/her name but on behalf of a local or foreign merchant for indefinite period of time and ii) to the name and account of foreign merchants having no presence in Turkey.

Unless otherwise agreed in writing, assignor cannot assign more than one agent at the same time and for the same territory/region and the agency shall not act to the account of more than one company having competition with each other in the territory. This principle is applied by law even no provision related to the exclusivity exists in the agency agreements.

Generally Turkish law accepts that agents are authorized to send and accept notifications, protests or make declarations aiming to protect the benefits of the assignor related to the contracts he involved.

Due to disputes arising from these agreements, agencies may sue on behalf of assignor, as may be brought against him in the same capacity. Restricting provisions of the agreements in which the agent acts to the account of foreign assignor in this regard are deemed invalid. However, the decisions taken in Turkey as a result of lawsuits and against those agencies whom acting in the name and to the account of assignor shall not be executed to the agents.

In some cases, the agent is not authorized to act to the account of the assignor. For example; without specific written consent or the mandate of the assignor, the agency shall not receive the payments of the goods not delivered in person or to accept the delivery for goods not paid by him in person or to make discount on such goods. Moreover, the agent is shall not enter any agreement to the name of the assignor without any specific written consent. Documents granting right to enter an agreement to the name of the assignor shall be registered and announced.

According to the Turkish law, agents, if not proved to be excellent, are responsible for the damages suffered to the goods during storage at the account of the assignor. The agent should notify all aspects of the assignor's interest including but not limited to financial statements of the third parties and customers, conditions and changes in the market in relation to transactions carried out. On the other hand, the agents are authorized to delay in process until he receives clear instructions. However, the agent should as prudent merchant in cases where the transaction requires urgent reaction or the assignor is not reached. Agent has right to charge for the transactions with the third parties during the agency relationship, or provided on his own initiative during the continuation of the same nature.  If the agent has been assigned for only a particular region or customer in the territory the agent has surprisingly also right to charge for the transactions in his territory or the transactions established through customers in neighbor regions.

The agent has also right to charge for the transactions provided after the agency relationship ends providing that (i) the agent has intermediated for the transaction or the transaction has been provided in portion of his contribution or in a reasonable period of time after ending the relationship. Moreover, the agent has also right to charge if a third-party offer reaches to the agent or the assignor before ending of agency relationship. This fee is required by equity share in accordance with the conditions and the new agent receives an appropriate share. The agency is also entitled to charge for collection of the money in accordance with the instructions of the assignor.

The agency is entitled to charge when the transaction is fulfilled to the extent his eligibility. The Parties may change this rule in the agency agreement, however the agent is entitled to get an advance payment on the last day of the month following the transaction is fulfilled. In any case the agent deserves the remuneration after third party fulfills the transaction. If no remuneration provision exists in the agreement the remuneration for the agent is determined by custom practices or by the commercial court. The remuneration shall be paid within three months of the entitlement or on the date of termination of the agency agreement at the latest. Agreements on opposite of these provisions are null and void to the extent that the provisions are against the agent. Agency agreement made for an indefinite period might be terminated by either party giving three months prior notice. An agency agreement for a definite period of time becomes indefinite if continues to apply after the expiration of the initial period.