Ⅰ. INTRODUCTION
Nowadays, the increasing competitive pressure leads companies to various promotional strategies in order to strengthen their brand values and to gain visibility in the public. In this context, sponsorship relationships have become an important and continuous part of business life, going beyond being just a marketing tool. The practice of sponsorship, which can be found in various fields such as sports clubs, artistic organisations, social responsibility projects and academic collaborations, is essentially a relationship of support and visibility based on mutual interest. However, as the sponsorship contracts that form the basis of these relationships are not clearly and systematically regulated in Turkish law, their legal nature and the obligations imposed on the parties are largely determined by the doctrine and case law of the Court of Cassation.
This study discusses the definition of the sponsorship agreement, its legal structure and the aspects that distinguish it from similar agreements, and then examines the balance of benefits between the parties, the division of responsibilities and the legal disputes that frequently arise in practice.
Ⅱ. BASIC ELEMENTS AND LEGAL NATURE OF A SPONSORSHIP AGREEMENT
A sponsorship agreement is an arrangement whereby one party (the "Sponsor") provides financial or in-kind support to the other party (the "Sponsi") for a particular activity, event or organisation in exchange for reciprocal obligations to promote the Sponsor's name, brand or products in certain ways.
The fundamental elements of a sponsorship agreement are as follows:
- Reciprocity (consideration): The Sponsor provides support, while the Sponsi assumes the obligation of promotion.
- Promotional purpose: The aim is for the Sponsor to gain visibility and prestige.
- Specificity to time, activity, or event: Sponsorship is often tied to a particular project.
- Continuity and cooperation: The impact of sponsorship often extends beyond the duration of the contract.
There is no specific provision in the Turkish Code of Obligations No. 6098 ("TCO") directly regulating sponsorship agreements. Therefore, sponsorship agreements are considered atypical (not expressly regulated) and hybrid in nature. As they are not explicitly addressed in the TCO, sponsorship agreements are classified as innominate contracts and shaped by practical needs. Moreover, as these agreements create ongoing obligations between the parties, they constitute continuing debt relationships; and since the Sponsor's obligation to provide support and the Sponsi's obligation to promote are based on mutual performances, the agreement is regarded as a bilateral and onerous contract.
As set forth by the General Assembly of Civil Chambers of the Court of Cassation in its decision dated 16.05.2019, docket number 2017/60, decision number 2019/579:
"...due to the sui generis and innominate nature of the agreement, if the parties have stipulated a specific rule within the contract concerning the concrete dispute, this rule must be applied in the first place. Furthermore, these agreements must be interpreted and supplemented in accordance with the principle of good faith and customary commercial practices. If the parties' intent cannot be ascertained and the agreement cannot be interpreted, Article 1 of the Turkish Civil Code ("TCC") shall be applied."
It is clearly stated that in sui generis agreements, if the parties have stipulated a specific provision to be applied, that provision will prevail; in the absence of such a provision, the judge shall apply the general provisions of the TCO by analogy, and, if necessary, consider commercial customs and usages. Where no regulation exists at all, the judge shall act as a legislator and establish a legal norm pursuant to Article 1 of the Turkish Civil Code No. 4721 ("TCC"). Sponsorship agreements may include elements of service agreements, advertising agreements, donation agreements, work agreements and sometimes lease agreements. Therefore, the relevant provisions of the TCO should be applied to these agreements by analogy. In practice, they are mostly interpreted based on the provisions of service contracts.
Ⅲ. OBLIGATIONS OF THE PARTIES AND ALLOCATION OF RESPONSIBILITIES
The sponsorship agreement is a bilateral and reciprocal contract. The performances and related obligations undertaken by both parties are assessed within the framework of Article 2 of the Turkish Civil Code on good faith and the general provisions governing the consequences of breach of obligation.
In Turkish law, there is no general restriction on becoming a Sponsor; however, certain persons and sectors are prohibited from sponsoring under specific regulations. In particular, individuals or entities involved in activities contrary to public order, companies dealing in tobacco or alcoholic products, betting companies, and those under enforcement for tax or social security debts cannot act as Sponsors. These limitations are not implemented through a direct permit system, but rather through prohibitions specific to certain areas.
1. Obligations of the Sponsor
- Obligation to Provide Support: The Sponsor is obliged to deliver the financial or in-kind support undertaken under the agreement in the manner, time, and amount specified. This is a principal performance, and failure to comply may trigger remedies such as specific performance, compensation, or termination under Article 112 of the Turkish Code of Obligations ("TCO").
- Duty of Loyalty: The sponsorship relationship is based on mutual trust. Accordingly, the Sponsor must refrain from behaviour that could harm the commercial reputation of the Sponsi, public statements damaging to its image, or actions that may jeopardize the relationship.
- Confidentiality and Brand Protection Obligation: During the sponsorship process, the Sponsor must not disclose any trade secrets, business models, or intellectual property elements belonging to the Sponsi.
2. Obligations of the Sponsi
- Promotion Obligation: The Sponsi must ensure visibility for the Sponsor in the manner agreed in the sponsorship contract; it must promote the Sponsor's brand, logo, or products through the agreed media channels. This obligation is a core element of the agreement, and failure may result in liability under Article 112 TCO.
- Obligation to Execute the Event or Conduct the Activity: If the support was granted for a specific event (e.g., a concert, fair, or competition), the Sponsi is obliged to carry it out. Breach of this obligation is typically evaluated under the concepts of impossibility or contractual non-performance. Articles 136 and 112 of the TCO may be applied together.
- Duty of Loyalty and Non-Compete Obligation: If the Sponsi simultaneously provides visibility to a competing brand in a way that harms the Sponsor's competitive position, this may constitute covert competition and breach of contract. The duty of loyalty, as an implied obligation, derives from the principle of good faith.
As a matter of fact, the above-mentioned obligations of the parties are a consequence of the mutual obligation of the sponsorship agreement. Although sponsorship agreements are accepted as a unique type of contract in practice, they may contain elements of various types of contracts such as service, advertising, donation and work contracts. Therefore, in the event that the parties breach the contract or fail to fulfil their obligations as required, the relevant provisions of the TCO should be applied by analogy, taking into account which obligation has been breached and the nature of this obligation.
Ⅳ. TERMINATION OF THE CONTRACT AND DISPUTE RESOLUTION
Sponsorship agreements are typically concluded for a fixed term and automatically expire upon the lapse of this term. However, in cases where one party breaches the agreement or the trust relationship is undermined, termination for just cause is possible and may be assessed by analogy through Articles 435 et seq. of the TCO. Upon termination, claims such as reimbursement of expenditures, compensation for damages, and cessation of the use of the Sponsor's brand elements may arise.
The most common disputes in sponsorship agreements stem from failure by one or both parties to perform their contractual obligations. Failure by the Sponsor to provide the promised support or by the Sponsi to carry out the necessary promotional activities constitutes breach of contract and may lead to specific performance, compensation, or termination under Article 112 TCO. Cancellation of the event or conduct by the Sponsi that damages the Sponsor's reputation may also justify termination for just cause. In the event of a breach of a non-compete clause, reliance on exclusivity provisions may allow the Sponsor to claim damages and seek termination.
Ⅴ. CONCLUSION
Sponsorship agreements stand out as sui generis contracts that differ from classical contractual relationships, especially within today's brand- and promotion-driven commercial framework. As these agreements are not expressly regulated under Turkish law, they are considered innominate and atypical. Shaped by practical necessity, they have evolved into bilateral and reciprocal contractual relationships based on the dual obligations of support and promotion.
Given the nature of the sponsorship agreement, the scope of the relationship, the content of the performances, and the duration should be carefully defined. The contract text must be clear, detailed, and purpose-driven to prevent potential disputes.
In cases where parties breach their obligations, the general provisions of the Turkish Code of Obligations apply by analogy. In particular, cases such as inadequate promotion, failure to provide the agreed support, or violation of the duty of loyalty may give rise to termination and claims for damages. Furthermore, since sponsorship relationships are closely tied to the commercial reputation and public visibility of the parties, even ethical or socially sensitive issues may justify termination of the agreement due to a breakdown in trust. In this regard, it is essential for sponsorship agreements to include not only performance-based provisions but also protective clauses that anticipate potential crises in the relationship, which are critical for both contractual security and brand reputation.
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.
