Application Of General Terms And Conditions To Merchants

General Terms and Conditions

General terms and conditions, which developed earlier in other legal systems compared to our country, constitute a type of legal regulation aimed at protecting the weaker party of a contract in terms of interpreting long, complex, and pre-formulated contract texts imposed upon them by the stronger party. The first legal regulation of this approach, which was relatively late to be incorporated into Turkish law, was included in Article 6 titled “Unfair Terms in Contracts,” added on March 6, 2003, to the repealed Consumer Protection Law No. 4077 by Law No. 4822. The current equivalent of this regulation is found in Article 5 of the Consumer Protection Law No. 6502. However, in contracts where one of the parties is not a consumer, the limitation of general terms and conditions is regulated under Articles 20 to 25 of the Turkish Code of Obligations.

Additionally, Article 55/f of the Turkish Commercial Code (TCC) restricts the use of “contractual terms contrary to the principle of good faith” in contracts between merchants and considers them as “unfair competition” within certain criteria.¹

Application of General Terms and Conditions to Merchants

First of all, Article 55 of the TCC encompasses merchants regardless of whether they are the party using the terms or the counterparty to the contract, in cases where there is unfair competition and where general terms and conditions meet the requirements set out in Article 55/1-f. However, in commercial contracts that do not constitute unfair competition but still contain general terms and conditions, should the provisions of the Turkish Code of Obligations be applied to protect the merchant?

According to one view in the doctrine, Articles 20–25 of the Turkish Code of Obligations apply to all private law relationships regardless of whether the parties are natural or legal persons, except for exceptions regulated under special laws. In this context, it is argued that merchants may also benefit from the protection provided under the general terms and conditions provisions of the Code of Obligations.² In line with this view, another doctrinal opinion states that the application of Articles 20–25 of the Code of Obligations in all contracts, whether commercial or not and outside consumer transactions, is subject to the condition that the counterparty requests such application.³

According to the opposing view in doctrine, the protection of merchants against general terms and conditions is limited to cases of unfair competition regulated under Article 55 et seq. of the TCC. Apart from this, merchants are not entitled to protection against general terms and conditions. In other words, the application of Articles 20–25 of the Turkish Code of Obligations to merchants is not possible.⁴

In our opinion, Articles 20–25 of the Turkish Code of Obligations aim to protect the weaker party in a contract against the stronger party, and contracts between merchants should not benefit from this protection. Otherwise, fundamental principles such as freedom of contract, the prudent merchant standard, and the free market would be undermined. In particular, the obligation of a merchant to act as a prudent businessperson, as stated in Article 18/2 of the TCC, is limited to the merchant’s commercial transactions and activities. This obligation encompasses all obligations determined by law or contract in a broad sense. This obligation is not subjective but objective in nature. Indeed, when determining the scope of this obligation, not the personal characteristics and abilities of the merchant but the behavior of a careful, reasonable, and prudent merchant operating in a similar field should be taken into account according to the nature of the work.⁵

In one of its decisions, the Court of Cassation (Yargıtay) ruled that: “…Although it was stated that items such as file expenses should be deemed unwritten in accordance with general terms and conditions, since the parties are merchants, pursuant to Article 18/2 of the TCC No. 6102, every merchant must act as a prudent businessperson in all activities related to their trade…”⁶ Thus, while the provisions regarding general terms and conditions set out in Articles 20–25 of the Turkish Code of Obligations may be applicable to merchants, considering the obligation of merchants to act prudently under Article 18/2 of the TCC, it emphasized that the application and evaluation of these conditions should be handled more carefully in light of the specific circumstances of each case.

In another decision, the Court ruled that: “…According to the decision of the 19th Civil Chamber of the Court of Cassation numbered 2012/5456 E. and 2012/13988, it is clear, as in many similar precedents and based on the reasoning of our court above, that in commercial transactions and loans between merchants, general terms and conditions are not required and cannot be sought…”⁷ thereby rejecting the application of general terms and conditions in transactions between merchants.

In doctrine, it is exceptionally stated that in cases where small and medium-sized merchants may need protection against larger-scale merchants (for example, a merchant signing a contract with a bank to obtain a commercial loan), the provisions of the Turkish Code of Obligations should be applied. Similar to consumers, it is argued that merchants often do not have the opportunity to negotiate or influence the content during the formation of the contract and, in situations where it is not possible to conclude the contract without accepting the conditions set by the other party, the control of general terms and conditions should also be applied to merchants.

There are also decisions of the Court of Cassation stating that general terms and conditions apply to merchants as well, based on the fact that no distinction is made between merchants and consumers within the scope of the provisions of the Turkish Code of Obligations regarding general terms and conditions.⁸

In one such decision, the Court of Cassation ruled that: “…The control of general terms and conditions, which applies to both consumers and merchants, protects the party who is in a more disadvantageous position at the stage of signing the contract within the framework of the principle of good faith…” ⁹ thereby not making any distinction in the context of general terms and conditions.

Conclusion

In conclusion, the issue of the applicability of general terms and conditions to merchants has not been resolved in a uniform manner in either doctrine or judicial precedents. On the one hand, it is accepted that Articles 20–25 of the Turkish Code of Obligations may apply to all private law relationships without distinction between parties, and that merchants may also benefit from such protection. On the other hand, it is argued that, due to the principle of the prudent merchant regulated under Article 18/2 of the Turkish Commercial Code and the dynamics of commercial life, such protection should be limited in contracts between merchants. Although the decisions of the Court of Cassation vary depending on the specifics of each case, they demonstrate a tendency not to completely exclude the control of general terms and conditions but to apply it more narrowly and carefully within the framework of the merchant’s obligation to act prudently. Accordingly, rather than adopting an absolute acceptance or rejection regarding the applicability of general terms and conditions in contracts between merchants, it is concluded that each case should be evaluated individually, taking into account the parties’ economic power, bargaining opportunities, and the process of formation of the contractual terms.

Footnotes

^{1 Oğuzman, M. Kemal, Öz, Turgut, Borçlar Hukuku Genel Hükümler Cilt 1, Vedat Kitapçılık 2022, 20th Ed. p. 166-167}

^{2  YELMEN, s.72; YILMAZ, s.142; ATAMER, Genel İşlem, s.137.}

^{3 EREN, Fikret, Borçlar Hukuku Genel Hükümler, Yetkin Yayınları, 19.Baskı, Ankara 2015 p. 217}

^{4 Ersöz, Oğuz Hukuk Fakültesi Dergisi Yıl 3 Sayı 1 - Haziran 2017 (69-104)}

^{5  Ersöz, Oğuz Hukuk Fakültesi Dergisi Yıl 3 Sayı 1 - June 2017 (69-104)}

^{6 Yargıtay 19th CC ., E. 2016/15462 K. 2018/713 T. 19.2.2018}

^{7 Yargıtay 11th  CC 2023/5 E. ,  2024/2573 K.}

^{8 Yargıtay 19th   CC., E. 2014/5865 K. 2014/10353 T. 02.06.2014}

^{9 Yargıtay 11th Civil Chamber 2016/8789 E. , 2017/7099 K.}