The Turkish Court of Appeals has taken a hard line against
standard terms and conditions presented as part of a
"take-it-or-leave-it" contract. In February 2013, the
court held that standard terms and conditions which have not been
prepared for a single, specific transaction will be deemed
In the case, a bank and its customer executed a general loan
agreement; the third party defendant mortgaged its property to
secure the customer's repayment obligation. The bank included a
general transaction term in the mortgage providing that the
mortgagor was also a joint guarantor of the amounts due under the
loan agreement. The Court of Appeals declared this clause invalid,
"nonexistent" to use the court's term, as it did not
conform to the nature of the mortgage transaction.
The legal standpoint
Under Turkish Code of Obligations (No. 6098) (the
"TCO"), the provisions of template agreements drafted by
one party for use in multiple transactions are considered
"standard terms and conditions." The drafting party must
inform the other party of each of these terms and conditions, and
the non-drafting party must have negotiated and accepted each of
them, absent which the standard terms and conditions are deemed
"nonexistent." Standard terms and conditions that do not
conform to the nature of the agreement or transaction are also
The Court of Appeals' approach to general terms and
conditions is clear — terms that are contrary to good faith,
weaken the counterparty's position and do not specifically
relate to the transaction are non-existent.
While it is helpful that the Court of Appeals has delivered a
decision on this crucial issue which has been debated since the TCO
entered into force in July 2012, the Court of Appeals has not yet
established a consistent approach. Still, the decision sheds light
on how the Court of Appeals interprets "general terms and
conditions." Consequently, those drafting template agreements
should be careful in how the content of these agreements is
communicated to their customers, and ensure that the customer
reviews, and is duly advised on, the agreement's content,
especially provisions detrimental to the customer's
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.
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