Notice Of Defects In Sales Contracts Between Merchants: An Assessment Under Article 23 Of The Turkish Commercial Code

1. Introduction

The speed and transactional certainty required by commercial life impose a higher standard of diligence on merchants in sales relationships compared to ordinary contractual relationships. One of these obligations concerns the buyer’s duty to inspect the goods within the prescribed period and to notify the seller of any defects identified.

While the principal provisions governing the seller’s liability for defects are set out in the Turkish Code of Obligations No. 6098 (“TCO”), Article 23 of the Turkish Commercial Code No. 6102 (“TCC”) contains specific rules applicable to commercial sales where both parties are merchants. In particular, Article 23/1(c) of the TCC is of considerable practical importance as it provides different notification periods depending on the nature of the defect.

Failure to provide timely notice may result in the buyer losing its rights arising from the defect and being deemed to have accepted the goods together with their defects. Accordingly, in commercial disputes, before addressing the merits of the alleged defect, the key issues often concern the nature of the defect and whether notice was given within the statutory period and in a provable manner.

2. The Concept of Defect in Commercial Sales and the Seller’s Liability

Pursuant to Article 23/1 of the TCC, unless otherwise provided under the specific provisions of that article, the provisions of the TCO governing sales contracts apply to sales and barter transactions between merchants. Therefore, when assessing defects in commercial sales, Article 23 of the TCC must be considered together with Article 219 et seq. of the TCO.

Under Article 219 of the TCO, the seller is liable for the absence of qualities represented to the buyer and for material, legal or economic defects that eliminate or substantially diminish the value of the goods or their fitness for their intended use. As a rule, the seller’s lack of knowledge of the defect does not eliminate such liability.

The nature of the defect is particularly important in determining the applicable notification period. In commercial sales, defects may generally be classified into three categories:

Apparent defects are defects that can be identified at the time of delivery through an ordinary visual inspection. For example, goods that are broken, incomplete or visibly damaged at the time of delivery would generally fall within this category.

Defects discoverable upon inspection are not immediately apparent at delivery but can be identified through an ordinary inspection or examination of the goods.

Latent defects, on the other hand, cannot reasonably be identified through an ordinary inspection and become apparent only through use of the goods or after a certain period of time. Turkish judicial practice also generally considers defects that cannot be discovered through an ordinary inspection to be latent defects.

This distinction is not merely theoretical; it directly determines the period within which the buyer must notify the seller of the defect.

3. Notification Periods Under Article 23/1(c) of the TCC

Article 23/1(c) of the TCC specifically regulates notice of defects in commercial sales. If the defect is clearly apparent at the time of delivery, the buyer must notify the seller within two days. If the defect is not clearly apparent at delivery, the buyer must inspect or have the goods inspected within eight days following delivery and, if a defect is discovered as a result of such inspection, notify the seller within the same period. In other cases, Article 223/2 of the TCO applies.

Accordingly, the relationship between the nature of the defect and the applicable notification period may be summarized as follows:

• Defects clearly apparent at delivery → 2 days from delivery,
• Defects discoverable through an ordinary inspection → inspection and notification within 8 days from delivery,
• Latent defects that cannot be discovered through an ordinary inspection → notification without undue delay after discovery of the defect.

For latent defects, the TCC does not prescribe a specific number of days but instead refers to Article 223/2 of the TCO. Therefore, where a latent defect subsequently becomes apparent, the buyer must notify the seller without unreasonable delay after discovering it. Otherwise, the buyer may be deemed to have accepted the goods together with the defect.

This issue is particularly important in relation to technically complex goods such as machinery, equipment, electronic components and production materials, where it may not always be straightforward to determine whether a defect is apparent or latent. In disputes concerning such goods, expert examination is often necessary to determine whether the defect could reasonably have been discovered at delivery or through an ordinary inspection within the eight-day period.

4. Form and Proof of the Notice of Defect

One of the significant issues arising in practice is whether a notice of defect between merchants is subject to a specific form requirement.

Article 18/3 of the TCC provides certain methods for notices between merchants concerning default, termination or rescission of an agreement, including notification through a notary public, registered letter, telegram or registered electronic mail using a secure electronic signature. However, notice of defects is not expressly included among the notifications listed under Article 18/3 of the TCC.

Accordingly, both legal scholarship and certain judicial decisions recognize that notice of defects is not subject to a specific formal requirement and that the fact that notice was given may, depending on the circumstances, be proven through various forms of evidence. In judicial practice, notices of defects have in certain cases been treated as matters of fact rather than formal legal transactions, allowing evidence such as e-mail correspondence, service records and witness statements to be considered.

Nevertheless, judicial practice has not always been entirely uniform. Certain decisions have placed greater emphasis on the notification methods specified under Article 18/3 of the TCC when assessing whether a merchant has sufficiently proven that notice was given. Legal scholarship similarly notes differing approaches in the case law regarding the form and proof of notices of defects.

Therefore, from a practical perspective, the safest approach is to provide notice in writing and through a method that can subsequently be proven. Particularly in high-value commercial transactions, notification through a notary public or the Registered Electronic Mail (“KEP”) system significantly reduces potential evidentiary disputes concerning the date, content and recipient of the notice.

The content of the notice is equally important. Rather than merely stating that “the goods are defective,” the buyer should clearly identify the nature of the defect, the relevant goods or delivery, and, where possible, the date on which the defect was discovered.

5. Consequences of Failure to Provide Timely Notice

The buyer’s obligation to notify the seller of a defect is generally characterized not as a contractual obligation in the strict sense, but as a legal burden (Obliegenheit). In other words, the buyer cannot be compelled to provide notice; however, failure to comply with the statutory inspection and notification requirements may result in the loss of rights arising from the defect.

Where the buyer provides timely notice, Article 227 of the TCO generally entitles the buyer to exercise one of the following remedies:

• rescind the contract by declaring its readiness to return the goods,
• retain the goods and request a reduction in the purchase price proportionate to the defect,
• request free repair of the goods, provided that such repair does not entail excessive costs, or
• request replacement of the defective goods with defect-free goods, where possible.

The buyer’s right to claim damages under the general provisions also remains reserved.

Conversely, where the buyer fails to notify the seller within the applicable statutory period, the buyer will, as a rule, be deemed to have accepted the goods together with the existing defect and may lose the right to exercise the remedies arising from the seller’s liability for defects. Consequently, one of the seller’s most significant defenses in commercial disputes is often to argue, before addressing the merits of the alleged defect, that the buyer failed to comply with the statutory inspection and notification requirements within the prescribed period.

This rule, however, is not absolute. Pursuant to Article 225 of the TCO, a seller acting with gross fault cannot avoid liability by relying on the buyer’s failure to provide timely notice. Likewise, a professional seller cannot benefit from the buyer’s failure to provide timely notice in relation to defects that the seller should have known about. Therefore, where the seller knew of and concealed the defect or otherwise acted with gross fault, the buyer’s failure to comply with the notification period may not, by itself, eliminate the seller’s liability.

6. Practical Considerations

In disputes concerning defective goods between merchants, proving that the goods were in fact defective is not sufficient in itself. The buyer must also be able to establish when the goods were delivered, when the defect became discoverable in light of its nature, and when the seller was notified.

For this reason, commercial enterprises should implement systematic procedures for the acceptance and inspection of goods. Goods should be inspected upon delivery; photographs or video records should be taken where appropriate; reservations concerning visible defects should be recorded in delivery documents; technically complex goods should be tested without delay; and any identified defects should promptly be notified to the seller in writing.

In particular, the relatively short two-day and eight-day periods under Article 23 of the TCC require companies to structure their procurement and goods-acceptance procedures in accordance with these statutory requirements. Even if storing goods for several weeks before inspection may be commercially common in a particular business, the buyer may nevertheless lose its rights if it is determined that the defect could reasonably have been discovered earlier through an ordinary inspection.

7. Conclusion

Article 23/1(c) of the TCC establishes a strict and specific framework for notices of defects in sales contracts between merchants. The two-day notification period applicable to defects clearly apparent at delivery and the eight-day inspection and notification period applicable to defects discoverable through an ordinary inspection reflect the expectation that merchants act promptly and diligently in commercial transactions. In cases involving latent defects, Article 223/2 of the TCO requires the buyer to notify the seller without undue delay once the defect becomes apparent.

In practice, the existence of a defect is only one aspect of the dispute. Whether the defect is apparent or latent, when it became reasonably discoverable, and whether the buyer provided timely notice are often decisive in determining the outcome.

Furthermore, considering the varying judicial approaches concerning the form and proof of notice, merchants should avoid relying solely on oral communications. Even where notice is considered not to be subject to a strict formal requirement, providing written notice through a method capable of establishing its date, content and receipt remains the safest approach.

Ultimately, protecting a merchant’s rights in cases involving defective goods depends not only on establishing the existence of the defect, but also on properly managing the delivery, inspection, notification and evidentiary process within the short statutory periods prescribed under Article 23 of the TCC.

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.