Agency contracts are regulated under the new Turkish Commercial Code No. 6102 (“NTCC”), that at it’s Article 102 states, “he/she who takes as a profession the permanent carrying out of negotiation activities (i.e. intermediation activities) for contracts relating to a commercial enterprise or conclusion of such contracts on behalf of such commercial enterprise in a specific place or territory, without an ancillary role such as a commercial intermediary, mercantile agent, sales clerk or employee, shall be deemed to be an agent.”
Therefore the agent assumes the task of promoting, on a constant base and for a specific principal, the conclusion of contracts in a given area. This stable cooperative relationship, remunerated with a commission, could both be temporary or established for an indefinite period. In the first case, if the agency contract is stipulated for a definite period of time, the agreement will automatically terminate with the expiry of the term. On the other hand, if the contract is a permanent contract, then each party can rescind the contract giving at least three months of advice.
Article 121 of NTCC states that, in case of temporary agency contract, if the parties continue to give execution to the contract even after the expiry of the terms then it will automatically convert in an indefinite period agreement, just as stated by the Article 1750 of the Italian Civil Code.
As regards the regulation of agency contracts, interesting novelties were introduced by the new Turkish Commercial Code entered into force in 2012, which modernized the related law and harmonized it with the European legislation. In particular, the normative related to the termination of the contract has been substantially modified. The agreement can always be terminated because of a just cause (i.e. delay in the payments; non-fulfilment of the contract; etc.) or according to the reasons agreed between the parties, as long as they are not against the law. Furthermore, there are the cases of termination regulated by the New Turkish Commercial Code.
As a result of the termination of the agency agreement, the agent is entitled to request some compensations from the principal.
First of all, in accordance with what established by EU directives, the Article 122 of NTCC regulates three cases in which the agent can demand a compensation:
– the principals keeps taking advantage from the new costumers acquired from the agent;
– the agent did not receive the commission related to contracts to be performed in a short time because of the termination of the agreement;
– considering all the circumstances, the payment of the compensation appears to be equitable.
Furthermore, the same Article 122/3 states that the agent has no right to the compensation in case the principal has terminated the agency contract because of the agent’s fault, or in case the agent himself terminated the agreement (unless the termination is imputable to the principal).
As regards to the amount of the compensation, this should not exceed the equivalent of a compensation for one year, calculated according to the average of the annual commissions paid in the last five years.
Another interesting innovation introduced by the NTCC regards the non-competition obligation after the end of the term of the agency contract. According to Article 123, the agreement restricting the activity of the agent in the period following the termination of the contract should be written, and should be signed by the principal and delivered to the agent. This agreement can last not more than 2 years from the termination of the contract, and it should refer to the same geographical area, the same kind of goods and group of costumers.
The principal shall pay a reasonable indemnity to the agent as a consequence of the non-competition limitation.