Turkey: Is The Convention On Contracts For The International Sale Of Goods (CISG) Applicable To Contracts For Work?

Introduction

The scope of application of the Convention on Contracts for the International Sale of Goods ("CISG" or "Convention"), which has been approved by law numbered 58701, and acceded to on 7 July 2010, with regard to contract types, is set forth under Article 3 of the CISG. This Article elaborates upon the application of the provisions of the CISG to contracts having the characteristics of contracts for work.

In General

Under Article 207 of the Turkish Code of Obligations ("TCO"), a contract of sale is defined as a contract where the seller is obliged to sell and transfer the ownership and the possession of goods to the buyer; whereas, the buyer undertakes to pay the sales price. On the other hand, under a contract for work, the contractor undertakes to perform certain, specified work; whereas, the principal undertakes to pay the contract price, in exchange, as regulated under Article 470 of the TCO. Further, contracts where one of the parties undertakes to fulfill characteristic obligations of different contracts, and the other party undertakes to pay the contract price, are referred to as mixed contracts by legal scholars2 and the Court of Cassation's decisions3.

In this regard, Article 3 of the CISG shows the features to be considered to determine whether a contract is to be qualified as a contract of sale under the CISG if the seller undertakes to produce, deliver, and/or install the sold goods, or to provide other kinds of services, in addition to its obligation to sell and deliver the possession and the ownership of the sold goods. Accordingly, interpretation of a contract of sale under the CISG is broader than the definition set forth under Turkish law.

CISG Article 3 (1)

Pursuant to paragraph 1 of Article 3, contracts in which the seller is under an obligation to manufacture or produce the goods would be deemed as a contract, of sale as it regards the application of the CISG. However, if the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture, then that contract would not be subjected to the CISG. In the event that a substantial part of the materials is provided by the buyer, then the main obligation of the buyer is to shape the provided material, and to provide manpower or services to the other party of the contract; therefore, these types of contracts would be deemed as service or employment contracts, or contracts for work4. Pursuant to the CISG Advisory Committee, the main feature that is used to determine which party is to provide the substantial part of the materials is the economic value of the materials provided by each party5. However, if the materials provided by the buyer are used for packaging or delivery of the goods, and not for the manufacture or production of the goods, this does not affect the applicability of the CISG to the relevant contract6.

With respect to paragraph 1 of Article 3, in order to decide whether or not the seller's obligation to sale of the goods to produce or manufacture the goods to be sold, the local courts consider whether the materials provided by the buyer are essential for the production or manufacture of the goods7 or whether the obligation to deliver the materials is regulated as a main obligation of the buyer8.

CISG Article 3 (2)

On the other hand, paragraph 2 of Article 3 of the CISG governs the applicability of the Convention to mixed contracts9. According to the said paragraph, the CISG does not apply to the contracts where the preponderant part of the obligations of the party who provides the goods is to supply labor or other services10.

Preponderant Part

Often times, the parties of a contract of sale agree that the seller is to perform certain services related to the sold goods, such as packaging and delivery of the goods, under the same contract governing the sales of the goods. In such cases, in order to determine whether the CISG applies to a mixed contract, it must be considered which obligation constitutes the preponderant part of the entire obligations of the party providing the goods11.

The determination of the preponderant part of the seller's obligations has been the subject of cases before local courts and arbitral tribunals12. According to these examinations, it has been concluded that if the preponderant part of the seller's obligation under a contract is the sale of the goods, and the other obligations can be qualified as ancillary obligations under the contract of sale, then the said contract would be subjected to the CISG13.

As stated by the CISG Advisory Committee, the "preponderant part" of the obligation must be interpreted considering the entire content of the contract, the purpose and essence of the contract, the weight given by the parties to different obligations under the contract, and the economic value given to different obligations14.

Economic Value Criteria

Pursuant to the CISG Advisory Committee, the main feature to be considered while interpreting the preponderant part of mixed contracts, is the economic value of each obligation under the contract15.

Thus, the ratio of the price of each obligation to the total contract price must be compared. Local courts often calculate the percentage of the prices of each obligation in order to determine the effect of each obligation to the contract price. If the price determined for the sales of goods is below 50 % of the total contract price, then it would be deemed that the preponderant part of that contract is not sales16.

However, even if the consideration agreed upon for the sales price is lower than 50% of the contract price; the contract may still be deemed as a contract of sale under the CISG, if the price determined for the sales is higher than the prices determined for the other obligations under the same contract. The Zurich Commercial Court qualified a contract as a contract of sale where the seller is obliged to sell computer applications to the buyer, upload these applications to the buyer's computer, and train the buyer in how to use these applications, since the consideration of the sales establishes 45 % of the contractual price, where the price determined to train the buyer constitutes 20 % of the contract price, and uploading the applications costs 35 % of the contract price17.

Further, during its evaluation as to whether or not the CISG is applicable to the relevant case, a local court qualified a contract as a contract of sale for the reason that the delivery and installment prices were not separately invoiced to the buyer, but the consideration for these services were included under the sales price, and that fact shows the parties intended to determine the sales to be the main obligation18.

Provisions to be applied to Mixed Contracts

As stated in the Commentary on the Draft Convention of 198019, with regard to mixed contracts that are subjected to the CISG, the application of the Convention is limited to the obligations, claims, and disputes regarding the sales of goods; whereas, the claims and disputes regarding the obligation to perform certain work that is undertaken by the party obliged to provide the goods, would be governed by the governing domestic law.

Conclusion

In accordance with our explanations regarding Articles 3(1) and 3(2) of the CISG, contracts for work are not subjected to the CISG, in principle. However, in mixed contracts, where the party obliged to provide the goods also undertakes to perform other obligations regarding contracts for work, would be subjected to the CISG, if the preponderant part of the seller's obligation is not the performance of work.

Footnotes

[1] RG. 14.04.2009, S. 27200.

[2] Tandoğan, Haluk: Borçlar Hukuku Özel Borç İlişkileri, Cilt 1, İstanbul 2008, p. 69; Eren, Fikret: Borçlar Hukuku Özel Hükümler, Ankara 2017, p. 871; Yavuz, Cevdet: Borçlar Hukuku Dersleri, Özel Hükümler, İstanbul 2014, p. 25; Serozan, Rona: Borçlar Hukuku Özel Bölüm, İstanbul 2002, p. 64-65; Kuntalp, Erden: Karışık Muhtevalı Akit, Ankara 2013, p. 288.

[3] Yargıtay Hukuk Genel Kurulu, 09.06.1982 T., 79-15-1613 E., 82-565 K.; Yargıtay 10. Hukuk Dairesi 22.01.1976 T., 1975/4935 E., 1976/1294 K. (legalbank.net).

[4] UN Doc. A/CONF. 97/5, Documents Officiels, p. 18; Schlechtriem, Peter/ Butler, Petra: UN Law on International Sale of Goods, Fribourg 2009, p. 23 – 24.

[5] Erdem, Ercüment H.: Milletlerarası Ticaret Hukuku, İstanbul 2017, p. 1999; Schlechtriem, Peter/ Witz, Claude: Convention de Vienne sur les contrats de vente internationale de marchandises, Paris 2008, p. 39-40.

[6] Erdem, p. 200; Schroeter, Ulrich G.: Vienna Sales Convention: "Applicability to "Mixed Contracts" and Interaction with 1968 Brussels Convention", 5 Vindobona Journal of International Commercial Law and Arbitration (2001), p. 74-86, http://www.cisg.law.pace.edu/cisg/biblio/schroeter1.html, (Access date: 28.12.2018).

[7] Cour d'appel de Colmar, 26.02.2008, 1A 07/03426, http://www.unilex.info/case.cfm?pid=1&do=case&id=1305&step=FullText, (Access date: 28.12.2018).; District Court München , 16.11.2000, 12 HKO 3804/00, http://cisgw3.law.pace.edu/cases/001116g1.html, (Access date: 19.12.2018).

[8] U.S. District Court, E.D., 19.03.2005, 03-CV-2835 (ADS) (JO), http://www.unilex.info/case.cfm?pid=1&do=case&id=1310&step=FullText, (Access date: 28.12.2018); Oberlandesgericht Karlsruhe (Almanya–Karlsruhe Mahkemesi), 12.06.2008, 19 U 5/08, http://www.unilex.info/case.cfm?pid=1&do=case&id=1348&step=Abstract, (Access date: 28.12.2018).

[9] Erdem, p. 200; Heiderhoff, Bettina: "CISG'in Uygulama Alanı (Konu Bakımından)", Milletlerarası Satım Hukuku, Milletlerarası Mal Satımına İlişkin Sözleşmeler Hakkında Birleşmiş Milletler Antlaşması, Haziran 2008, p. 27; Toker, Ali Gümrah: Uluslararası Taşınır Mal Satımına İlişkin Birleşmiş Milletler Sözleşmesi'nin (Viyana Sözleşmesi) Uygulama Alanı, Ankara 2005, p. 105.

[10] Erdem, Ercüment H.: "Viyana Satım Antlaşması'na Genel Bakış ve Maddi Uygulama Alanı", Milletlerarası Ticaret Hukuku ile İlgili Makaleler (2007-2016), İstanbul 2017, p. 141.

[11] Schlech¬triem/Witz, p. 30 – 31; Heuze, Vincent: La vente international de marc-handises –Droit uniforme, Paris 2000, p. 77.

[12] Arbitration Russian Federation, 16.12.2009, VAS-13520/09, http://cisgw3.law.pace.edu/cases/091216r1.html, (Access date: 28.12.2018); Handelsgericht Zürich, 26.04.1995, HG920670, http:// cisgw3.law.pace.edu/cases/950426s1.html, (Access date: 28.12.2018) and 17.02.2000, HG980472, http://cisgw3.law.pace.edu/cases/000217s1.html (Access date: 28.12.2018); Peter, Huber/Mullis, Alastair: The CISG, a new textbook for students and practitioners, 2007, p. 45.

[13] Arbitration Russian Federation, 16.12.2009, VAS- 13520/09, http://cisgw3.law.pace.edu/cases/091216r1.html, (Access date: 05.05.2017).

[14] CISG Advisory Council Opinion No.4: Contracts for the Sale of Goods to be Manufactured or Produced and Mixed Contracts (Article 3 CISG), 17 Pace Int'l L. Rev. 79 (2005), http: // digitalcommons.pace.edu/pilr/vol17/iss1/4, (Access date: 15.12.2018).

[15] CISG Advisory Council Opinion No.4: Contracts for the Sale of Goods to be Manufactured or Produced and Mixed Contracts (Article 3 CISG).

[16] 2012 UNCITRAL Digest of Case Law on the United Nations Convention on the International Sale of Goods, Digest of Article 3 Case Law, http://www.cisg.law.pace.edu/cisg/text/digest-2012-03.html, (Access date: 19.12.2018); Schroeter, http://www.cisg.law.pace.edu/cisg/biblio/schroeter1.html, (Access date: 19.12.2018).

[17] Handelsgericht Zürich, 17.02.2000, HG980472, http://cisgw3.law.pace.edu/cases/000217s1.html, (Access date: 28.12.2018).

[18] CISG Advisory Council Opinion No.4: Contracts for the Sale of Goods to be Manufactured or Produced and Mixed Contracts (Article 3 CISG); Loewe, Roland: "The Sphere of Application of the UN Sales Convention", Pace International Law Review, Vol. X (1998), p. 79-88, http://www.cisg.law.pace.edu/cisg/biblio/Loewe.html, (Access date: 19.12.2018).

[19] Commentary on the Draft Convention on Contracts for the International Sale of Goods, http://www.cisg.law.pace.edu/cisg/biblio/windship2.html, (Access date: 28.12.2018).

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions