Representation provisions are set forth in Articles 40 to 48 of the Turkish Code of Obligations No. 6098 ("TCO"), which has entered into force on 01.07.2012. The articles covering representation in the TCO are divided into two sections called "authorized representation" and "representation without authority".
Authorized Representation
According to Article 40 of the TCO, the consequences of a legal proceeding issued in the name and on behalf of a principal by an authorized representative shall bind the principal directly.
If the representative issues proceedings without informing the other party of his title, then the consequences of such legal proceedings shall bind the representative. However, if the other party is aware of the existence of the representative relationship, or if the issuance of a legal proceeding either with the representative or the principal does not make any difference, then the consequences of such legal proceeding shall bind the principal directly.
According to Article 41 of the TCO, while determining the content and degree of the representative authority, it is important to evaluate if such representative authority is derived from a legal proceeding or public law.
If the representation in the name and on behalf of a principal is derived from public law, the content and degree of the representative authority shall be determined pursuant to legal provisions. If representation is derived from a legal proceeding, then the content and degree of the representative authority shall be determined pursuant to such legal proceeding.
If notification regarding the representative authority is sent to the relevant third parties, then the content and degree of the representative authority shall be determined in accordance with said notification.
According to Article 42 of the TCO, the principal may always limit or cancel the representative authority arising from a legal proceeding. The principal may not waive from this right previously.
If the principal informed the relevant third parties, directly or indirectly, that he has granted authority for representation, then he shall inform such third parties in the event of cancellation in whole or in part of such representative authority. Otherwise, he may not declare to a bonafide third person that he has cancelled such authority.
Article 43 of the TCO regulates termination of a representative authority arising from a legal proceeding. Accordingly, unless otherwise agreed, a representative authority arising from a legal proceeding shall be terminated if (i) the principal or the representative dies; (ii) there is a declaration of absence; (iii) the principal or the representative loses legal capacity; or (iv) the principal or representative is declared bankrupt. The termination of a legal entity is also governed by the aforementioned criteria.
Article 44 of the TCO stipulates that where the representative is granted a certificate of authorization, the representative shall deliver such document to the principal or the place of deposit after termination of representation.
If the representative or its successor does not take the necessary actions in order to deliver the certificate, then they shall indemnify the damages of bonafide third parties.
According to Article 45 of the TCO, as long as the representative is not informed that his authority has been terminated, then the principal and his successor shall be bound to the consequences of legal proceedings issued by the representative. However, in the event the third parties are aware of the termination of such authority, this rule shall not be applied.
Representation without Authority
Article 46 of the TCO provides that when a person issues a legal proceeding without authorization, then the principal may only be bound to this proceeding if he gives his approval.
The other party, with whom the unauthorized representative proceeds, may request from the principal to inform within an appropriate time whether he will give approval or not. If the proceeding is not approved within such time, then the other party is released from being bound by such proceeding.
Article 47 of the TCO regulates that if the principal does not give approval expressly or implicitly, the indemnification of damages arising from a nullified proceeding may be requested from the unauthorized representative. However, if the unauthorized representative proves that the third party knew of his unauthorized representation, then the indemnification of damages may not be claimed from him.
Indemnification of other damages may also be claimed by the third party from an unauthorized representative with fault, on an equitable basis.
Conclusion
Articles 40 to 48 of the TCO delineate representation provisions under two sections called "authorized representation" and "representation without authority".
The consequences of a legal proceeding issued in the name and on behalf of a principal by an authorized representative shall directly bind the principal. If the representation is raised from a legal proceeding, then the content and degree of the representative authority shall be determined pursuant to such legal proceeding. If notification of the representative authority is sent to the third parties, then the content and degree of the representative authority shall be determined in accordance with this notification. The principal may always limit or cancel the representative authority arising from a legal proceeding.
Where a person issues a legal proceeding without authorization, the principal may only be bound by this proceeding if he gives his approval. If the principal does not give approval expressly or implicitly, the indemnification of damages arising from nullified proceedings may be requested from the unauthorized representative.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
