International Contracts with Turkey: Complete Legal Guide 2025

International Contracts with / in Turkey: Complete Legal Guide 2025

Introduction

Are you an international company looking to negotiate, draft, or secure a commercial contract with a Turkish partner? Are you wondering about the applicable law, essential clauses to include, pitfalls to avoid, or potential dispute resolution mechanisms?

Turkey represents a strategic market of over 85 million inhabitants, at the crossroads of Europe, Asia, and the Middle East. Turkish companies are major players in construction, energy, textiles, agribusiness, automotive, and logistics sectors. Establishing solid contractual relationships with Turkish partners requires an in-depth understanding of Turkish contract law, local business practices, and available legal protection mechanisms.

This comprehensive guide, written by the international business law attorneys at Asik & Partners law firm in Istanbul, accompanies you through all aspects of negotiating and securing your international contracts with Turkey.

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Table of Contents

Turkish Contract Law: Fundamental Principles
Types of International Contracts with Turkey
Negotiation and Drafting of International Contracts
Choice of Applicable Law and Competent Jurisdiction
Essential Clauses in International Contracts

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Turkish Contract Law: Fundamental Principles

The Turkish Legal Framework

Turkish law of obligations is primarily governed by:

The Turkish Code of Obligations (Türk Borçlar Kanunu - TBK), entered into force in 2012
The Turkish Commercial Code (Türk Ticaret Kanunu - TTK), reformed in 2012
The Turkish Civil Code (Türk Medeni Kanunu)
International conventions ratified by Turkey

The Turkish Code of Obligations is largely inspired by Swiss law, making it closer to European legal systems than other Eastern systems.

General Principles of Contract Law in Turkey

Principle of Freedom of Contract (Sözleşme Özgürlüğü)

Parties are free to:

Enter or not enter into a contract
Choose their contracting party
Determine the content of the contract
Choose the form of the contract (except legal exceptions)

Limitations: Public order, morality, fundamental rights, mandatory laws.

Principle of Consensualism

Under Turkish law, contracts are in principle valid by the mere exchange of consents, without particular formality.

Exceptions requiring a written form:

Real estate contracts (notarial deed required)
Guarantee/suretyship (written form required)
Exclusive distribution contracts
Assignment of significant receivables
Certain commercial contracts (franchising, agency)

⚠️ Recommended Practice: Even though an oral contract is valid, always formalize international contracts in writing to:

Facilitate evidence
Clarify obligations
Legally secure the relationship
Allow forced execution if necessary

Principle of Good Faith (Dürüstlük Kuralı)

Fundamental article of Turkish law: parties must act in good faith both during negotiation and contract execution.

Practical Consequences:

Obligation of loyalty in negotiations
Prohibition of abuse of rights
Obligation of cooperation in execution
Judge's ability to adapt the contract in case of manifest imbalance
Pre-contractual duty to inform

Example: If a party deliberately conceals essential information during negotiation, the contract may be annulled for fraud.

Binding Force of Contracts (Pacta Sunt Servanda)

"A contract is law between the parties"

Once validly concluded, the contract binds the parties who must execute it in good faith. Unilateral modification or termination is impossible, except:

By agreement of the parties
Contractual clause providing for it
Legal grounds (force majeure, serious breach by the other party)
Court decision

Validity Conditions of a Contract Under Turkish Law

For a contract to be valid in Turkey, the following are required:

Consent of the Parties (Rıza)

Consent must be:

Free: Absence of violence, coercion, state of necessity
Informed: Absence of fraud, substantial error
Expressed: Clear manifestation of will

Vices of Consent:

Error (Yanılma): Error on an essential element (identity, quality, quantity)
Fraud (Hile): Fraudulent maneuvers to deceive the other party
Duress (İkrah): Physical or moral constraint
Unconscionability (Gabin): Exploitation of a position of weakness (rare)

Sanctions: Annulment of the contract within one year from discovery of the vice.

Subject Matter of the Contract (Edim)

The subject matter must be:

Possible: Physically and legally achievable
Lawful: In accordance with public order and morality
Determined or Determinable: Precise or with determination criteria

Examples of unlawful subject matter:

Trade in prohibited products (weapons, drugs)
Contracts contrary to competition
Abusive clauses in adhesion contracts

Legal Capacity (Ehliyet)

Parties must have the capacity to contract:

Natural persons: Adults (18 years old) and enjoying their mental faculties
Legal entities: Represented by their authorized bodies
Foreign companies: Can contract in Turkey (verify signatory's powers)

Lawful Cause (Sebep - less central than in French law)

The cause of the contract must be lawful and moral.

Specificities of Turkish Commercial Law

Commercial Solidarity

In commercial matters, solidarity is presumed unlike civil law where it must be expressly provided.

Consequence: If several commercial debtors exist, the creditor can pursue one of them for the entire debt.

Legal Commercial Interest Rate

In case of payment delay, the commercial default interest rate applies automatically (approximately 30-40% per annum in 2025, indexed to inflation).

⚠️ Warning: These rates can be extremely high during inflationary periods. Consider contractually capping late payment interest.

Commercial Prescription

Commercial claims are subject to limitation periods of:

10 years: General principle
5 years: Periodic claims (rent, royalties)
1 year: Certain specific claims (transport, etc.)

Major Differences with French Law

Aspect	Turkish Law	French Law
Origin	Inspired by Swiss law	French civil tradition
Solidarity	Presumed in commercial law	Must be stipulated
Good Faith	Binding central principle	Important principle
Formalism	Limited (except real estate)	More important
Judge's Power	Significant (can adapt contract)	More restricted
Default Rates	Very high (30-40%)	Moderate (legal rate ~5-8%)
Penalty Clause	Reducible by judge	Reducible by judge

Types of International Contracts with Turkey

International Sale of Goods Contracts

Vienna Convention (CISG)

Turkey ratified the Vienna Convention on Contracts for the International Sale of Goods (1988).

Application: The CISG automatically applies to sales contracts between parties located in contracting states (France and Turkey), unless expressly excluded.

Advantages of CISG:

Uniform rules recognized internationally
Balance between buyer and seller
Abundant international case law
Flexibility

Key Points of CISG:

Simplified contract formation
Seller's obligations: conforming delivery
Buyer's obligations: pay the price, take delivery
Warranty for defects: mandatory notice within a "reasonable time"
Termination for fundamental breach
Damages

⚠️ Warning: The CISG does not cover:

Contract validity (capacity, vices of consent)
Effects on ownership of goods
Product liability

Essential Elements of an International Sales Contract

Mandatory Clauses:

Identification of parties: Complete corporate name, registered office, registration numbers
Subject of sale: Detailed description of goods (nature, quality, technical specifications, quantity)
Price: Amount, currency, payment terms
Delivery: Incoterm, place, deadline
Transfer of ownership and risks: Precise moment
Warranties: Conformity, hidden defects, duration
Liability: Caps, exclusions
Applicable law and dispute resolution

Recommended Clauses:

Late payment penalties
Hardship clause
Force majeure clause
Confidentiality
Price revision clause
Insurance
Intellectual property

International Distribution Contracts

Commercial Agency Agreement (Acente Sözleşmesi)

Definition: The commercial agent is an independent intermediary responsible for negotiating or concluding contracts on behalf of the principal, on a permanent basis.

Regulation: Turkish Commercial Code (articles 102-123)

Characteristics:

The agent acts in the name and on behalf of the principal
Contracts concluded directly bind the principal
Long-term relationship
Agent's independence
Commission-based remuneration

Agent's Obligations:

Promote sales
Provide market information
Act in the principal's interest
Loyalty (no competition)
Regular reporting

Principal's Obligations:

Pay agreed commissions
Provide necessary documentation
Inform agent of acceptances/refusals of orders
Respect exclusive territory (if provided)

⚠️ Agent Protection Under Turkish Law:

Upon termination, the agent may be entitled to:

Compensatory indemnity: Up to 1 year of average commissions
Goodwill indemnity: If the agent developed clientele profitable to the principal
Notice period: According to seniority (1 to 6 months)

Conditions for Indemnity:

Contract is terminated by principal (or by agent for principal's fault)
Agent brought new customers or developed clientele
Principal continues to benefit from these customers

Our Recommendation: Contractually provide precise termination and compensation conditions to avoid costly disputes.

Distribution Agreement (Distribütörlük Sözleşmesi)

Definition: The distributor purchases products in their own name and resells them in a given territory.

Difference from Agency:

Distributor buys and resells in their own name
Bears commercial risk
No representation relationship
More autonomy, but less legal protection

Key Points to Negotiate:

Territorial Exclusivity: Exclusive or non-exclusive, precise territory
Sales Targets: Annual minimums, sanctions for non-achievement
Pricing Policy: Recommended selling prices (beware of competition law)
Supply: Minimum quantities, delivery times
Marketing and Advertising: Cost sharing, brand usage
Training: Technical, commercial
After-sales and Warranties: Who handles?
Inventory: Minimum levels, buyback at contract end
Duration and Termination: Fixed or indefinite term, termination conditions, notice

Recommended Duration: 3-5 years with renewal, to allow distributor to invest

Non-compete Clause: Possible during and after contract (limited in time and space)

Franchise Agreement (Franchising Sözleşmesi)

Definition: The franchisor grants the franchisee the right to operate their concept, brand and know-how in exchange for royalties.

Regulation: Turkish Commercial Code (articles 180 bis and following) since 2012

Franchisor's Obligations:

Transfer know-how
Train franchisee
Provide technical and commercial assistance
Protect trademark
Guarantee territorial exclusivity (if provided)

Franchisee's Obligations:

Pay royalties (entry fee + royalties)
Respect concept and standards
Maintain quality
Confidentiality of know-how
Non-competition

Pre-contractual Information Document (DIP): Mandatory in Turkey

The franchisor must provide the potential franchisee with a complete document at least 1 month before signing, containing:

Network presentation
Audited accounts of franchisor
Market status
List of existing franchisees
Necessary investment
Financial forecasts

⚠️ Sanction: Lack of DIP = possible contract nullity

Sensitive Points:

Royalties (generally 5-15% of turnover)
Exclusive supply (legal if justified)
Post-contractual non-compete clause (max 2 years)
Stock buyback at contract end

International Service Contracts

Subcontracting and Engineering Contracts

Sectors Concerned: Construction, industry, energy, IT

Specific Clauses:

Technical Specifications: Precise specifications, applicable standards
Deadlines: Detailed schedule, milestones, late penalties
Work Acceptance: Procedures, reservations, warranty
Cascade Subcontracting: Authorized or not
Intellectual Property: Who owns the rights to creations?
Warranties: Completion warranty, ten-year warranty
Insurance: Professional liability, all-risk construction

Specific Case of Construction in Turkey:

The Turkish construction sector is highly developed. Points of attention:

Verify licenses and qualifications (Yapı Ruhsatı)
Mandatory bank guarantees (performance, advance payment)
Retention money (5-10% until final acceptance)
Mandatory earthquake insurance (DASK)
Ten-year liability

Consulting and Technical Assistance Contracts

Key Elements:

Mission: Precise definition, deliverables, methodology
Duration: Fixed or indefinite term, renewal
Remuneration: Fixed fee, time-based, success fee
Obligation of Means vs. Results: Clearly distinguish
Confidentiality: Essential
Ownership of Deliverables: Transfer or license?
Liability: Limitation and capping

⚠️ Withholding Tax: Fees paid to a foreign service provider may be subject to withholding tax in Turkey (generally 20%), unless a tax treaty provides for an exemption or reduced rate.

Franco-Turkish Tax Treaty: Often allows reduction or elimination of this withholding for technical and consulting services.

Joint Venture and Strategic Partnership Contracts

Contractual Joint Venture

Definition: Cooperation agreement between companies for a common project, without creating a company.

Advantages:

Flexibility
No creation of legal entity
Quick implementation
Risk limitation

Disadvantages:

No separate legal personality
Possible joint liability
Management complexity

Essential Clauses:

Cooperation Purpose: Specific project
Contributions of Each Party: Financial, technical, human
Role Distribution: Who does what
Governance: Decision-making, steering committee
Profit and Loss Sharing
Intellectual Property: Co-ownership or license?
Confidentiality and Non-competition
Duration and Exit: Dissolution conditions, asset allocation

Corporate Joint Venture (Creation of Joint Subsidiary)

Creation of a Turkish company owned by partners (usually a Limited Şirket).

Advantages:

Separate legal personality
Limited liability
Clear legal framework
Credibility vis-à-vis third parties

Points to Negotiate in Shareholders' Agreement:

Capital Distribution: 50/50 or majority/minority
Governance: Board composition, veto rights
Financing: Initial contributions, future capital increases
Profit Distribution
Share Transfer: Right of first refusal, tag along, drag along
Exit: Buy-back, sale to third parties, dissolution
Conflict Resolution: Deadlock, independent expert, arbitration

⚠️ Deadlock Problem: In case of insurmountable disagreement between 50/50 partners, provide exit mechanisms:

Russian Roulette: One shareholder proposes a price, the other chooses to buy or sell at that price
Texas Shoot-out: Sealed bids, highest bidder buys out the other
Expert Arbitration: Valuation by independent third party

Technology Transfer and License Agreements

Patent, Trademark or Know-how License

Regulation: Turkish Industrial Property Law + Code of Obligations

Key Elements:

License Object: Patents, trademarks, know-how, software
Territory: Turkey only or broader
Exclusivity: Exclusive or non-exclusive
Duration: Fixed term, renewal
Royalties: Amount, calculation, payment
Improvements: Who owns the rights?
Quality Control: Audits, standards to respect
Confidentiality: Know-how protection
Warranties: Validity of rights, non-infringement
Termination: Causes, consequences

⚠️ Taxation: Royalties paid by a Turkish company to a foreign beneficiary are subject to withholding tax (10% under the Franco-Turkish tax treaty for patents and know-how, 10-15% for trademarks).

Registration: Some license agreements must be registered with the Turkish Patent Institute (Türk Patent ve Marka Kurumu) to be enforceable against third parties.

Negotiation and Drafting of International Contracts

Pre-contractual Phase: Letter of Intent (LOI) and Memorandum of Understanding (MOU)

Purpose of LOI/MOU

Before signing a final contract, parties can formalize their willingness to negotiate through:

Letter of Intent (LOI)
Memorandum of Understanding (MOU)
Heads of Terms / Term Sheet

Objectives:

Formalize points of agreement in principle
Structure negotiation
Create climate of trust
Incur costs (due diligence, studies) in relative security

Legal Nature: Binding Commitment or Simple Intention?

⚠️ Crucial Question: Is the LOI/MOU legally binding?

This depends on the wording and intention of the parties:

Non-binding LOI:

Expresses simple intention to negotiate
No obligation to conclude final contract
But obligation to negotiate in good faith
Possible binding clauses: confidentiality, exclusivity

Binding LOI:

Can commit parties on certain elements
Risk of pre-contract if essential elements are fixed
Sanctions in case of abusive termination of negotiations

Recommended Wording:

"This Memorandum of Understanding constitutes a non-binding document expressing the Parties' intention to negotiate in good faith with a view to concluding a final contract. It creates no legally binding obligation except for clauses relating to confidentiality (Article X), exclusivity (Article Y) and cost allocation (Article Z)."

Typical LOI Clauses

Context and Objectives
General Principles of Contemplated Transaction
Conditions Precedent (obtaining financing, regulatory approvals, satisfactory due diligence)
Provisional Timeline
Negotiation Exclusivity (lock-up period): 30-90 days
Confidentiality: Binding clause
Costs: Each party bears its own negotiation costs
Applicable Law and Jurisdiction
Non-binding Nature (except specified clauses)

Legal and Commercial Due Diligence

Before concluding an important contract (acquisition, joint venture, distribution), thorough due diligence is essential.

Legal Due Diligence on Turkish Company

Objectives: Verify actual legal situation of Turkish partner

Points to Verify:

Corporate Status:

Turkish trade register extract (Ticaret Sicil Gazetesi)
Up-to-date bylaws
Shareholders register
Corporate body minutes
Signatory powers

Regulatory Compliance:

Licenses and authorizations necessary for activity
Tax compliance (non-debt certificates)
Social compliance (SGK - social security)
Environmental compliance

Ongoing Contracts:

Major customer and supplier contracts
Distribution/agency contracts
Commercial leases
Financing contracts

Intellectual Property:

Trademark registrations in Turkey
Filed patents
Domain names
Use licenses

Litigation:

Ongoing or potential disputes
Litigation history
Guarantees given

Assets and Liabilities:

Asset ownership (real estate, equipment)
Debts and commitments
Granted securities

Human Resources:

Key employment contracts
Labor disputes
Labor law compliance

Commercial and Financial Due Diligence

Analysis of financial statements (last 3-5 years)
Market position
Main customers (risk concentration?)
Key suppliers
Production capacities
Quality and certifications

Duration and Cost

Duration: 2 to 8 weeks depending on complexity

Cost (of Asik & Partners lawyers in Turkey) : €5,000 to €50,000 depending on scope

Our Support: Our lawyers in Turkey performs complete due diligence with detailed report in English identifying legal risks and recommendations.

Contract Drafting: Language and Translation

Which Language to Choose?

Options:

Single version in English: Most common solution in international contracts
Bilingual version (French/Turkish or English/Turkish): Each party in their language
Single version in Turkish: If required by law or Turkish party

Our Recommendation: Version in English with clause specifying that in case of dispute, the English version prevails.

Example clause: "This Agreement is drafted in English. In the event of any discrepancy between the English version and any translation, the English version shall prevail."

Beware of Turkish Translations: If a Turkish version is required (Turkish courts, registration), have it translated by a certified sworn translator to avoid interpretation errors.

Common Translation Errors:

Legal terms without exact equivalent
French/English law concepts not existing in Turkish law
Ambiguities created by translation

Structure of an International Contract

Recommended Standard Format

Preamble

Presentation of parties
Context and contract objective
Definitions

Contract Body

Contract subject
Obligations of each party
Price and payment terms
Delivery / Performance
Contract duration
Warranties
Liability and limitations
Intellectual property
Confidentiality
Force majeure and hardship
Termination
Applicable law and dispute resolution
General provisions

Annexes

Technical specifications
Price schedules
Document templates
Contact lists

Definitions: Crucial Section

Precisely define key terms to avoid any ambiguity:

Example:

"Products": means the [precise description]
"Territory": means the Republic of Turkey, excluding [any excluded zones]
"Price": means the price indicated in Annex 1, expressed in [currency], [excluding/including VAT], [Incoterm]
"Delivery": means the transfer of possession in accordance with [precise conditions]
"Intellectual Property Rights": means all patents, trademarks, copyrights, know-how, and other intellectual property rights

Choice of Applicable Law and Competent Jurisdiction

Applicable Law to the Contract

Principle of Party Autonomy

Parties are free to choose the law applicable to their contract (principle recognized by Turkish law and most legal systems).

Common Choices:

Turkish Law: Natural if the contract is mainly executed in Turkey
French Law: If the French party insists
English Law: Very common in international contracts (neutral, predictable)
Swiss Law: Compromise between civil law systems
Vienna Convention (CISG): For international sales

Recommended Choice of Law Clause:

"This Agreement shall be governed by and construed in accordance with the laws of [Country], excluding its conflict of laws provisions and the United Nations Convention on Contracts for the International Sale of Goods (CISG)."

⚠️ Important: Even if you choose foreign law, certain Turkish mandatory rules may still apply (labor law, consumer protection, competition law).

In Absence of Choice: Applicable Default Rules

If parties have not chosen applicable law:

Turkish courts will apply Turkish private international law rules
Generally: law of the country where the characteristic performance is located
For sale: seller's country
For services: service provider's country

Our Recommendation: Always explicitly choose applicable law to avoid uncertainty.

Choice of Jurisdiction: Courts or Arbitration?

Option 1: Turkish Courts

Jurisdiction Clause Example:

"The courts of Istanbul, Turkey, shall have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement."

Advantages:

Lower cost than arbitration
Enforcement in Turkey easier
Public proceedings (transparency)

Disadvantages:

Proceedings in Turkish (translation costs)
Longer delays (2-5 years)
Less predictable than arbitration
Difficulty enforcing abroad

When to Choose Turkish Courts:

Low-value contracts (< €50,000)
Disputes requiring interim measures in Turkey
Both parties comfortable with Turkish system

Option 2: International Arbitration

Arbitration Clause Example:

"Any dispute arising out of or in connection with this Agreement shall be finally settled by arbitration in accordance with the Rules of the International Chamber of Commerce (ICC). The place of arbitration shall be Istanbul, Turkey. The language of the arbitration shall be English. The arbitral tribunal shall consist of [one/three] arbitrator(s)."

Advantages:

Neutrality: Neither party's home court
Confidentiality: Private proceedings
Expertise: Choice of specialized arbitrators
Enforceability: New York Convention (160+ countries)
Speed: Faster than courts (12-24 months)
Finality: Limited appeal possibilities

Disadvantages:

Cost: €50,000-€500,000+ depending on stakes
No interim measures (must go to courts)
Complexity: Sophisticated process

When to Choose Arbitration:

High-value contracts (> €100,000)
International parties from different countries
Need for confidentiality
Complex technical/commercial disputes
Desire to avoid local courts

Main Arbitration Institutions

ICC (International Chamber of Commerce)

Seat: Paris
Most prestigious
Highest costs
Duration : long

ECAM (European Court of Arbitration and Mediation)

Seat: Strasbourg
Excellent reputation
Neutral location
Moderate costs
Duration : short, optimized

3. SCAI (Swiss Chambers' Arbitration Institution)

Seat: Switzerland
Excellent reputation
Neutral location
Moderate to high costs
Duration : Medium

Essential Clauses in International Contracts in Turkey

Price and Payment Terms

Currency and Exchange Rate Risk

Challenge: Turkish Lira volatility (significant depreciation in recent years)

Solutions:

Option 1: Hard Currency (EUR, USD, GBP)

Protects foreign party from devaluation
Turkish party bears exchange rate risk
May require Central Bank approval for certain transactions

Option 2: Turkish Lira with Adjustment Clause "The price is set at [X] TRY. If the EUR/TRY exchange rate varies by more than 10% compared to the reference rate of [date], either party may request a price adjustment."

Option 3: Dual Currency "The price is [X] EUR, payable in TRY at the exchange rate published by the Turkish Central Bank on the payment date."

Our Recommendation: For significant long-term contracts, use EUR or USD to avoid exchange rate disputes.

Payment Terms

Common Terms:

Advance Payment: 10-30% upon order
Progress Payments: Based on milestones
Payment on Delivery: COD or against documents
Payment Terms: Net 30/60/90 days

Late Payment Interest: Always specify rate (e.g., "3-month EURIBOR + 5%") and cap it to avoid exorbitant Turkish commercial rates (30-40%).

"In case of late payment, interest shall accrue at the rate of [X]% per annum, not to exceed 15% per annum, from the due date until full payment."

Payment Security

For Turkish Buyer:

Letter of Credit (LC) - irrevocable confirmed
Bank guarantee
Documentary collection
Advance payment

For Foreign Seller:

Payment against documents
Letter of credit
Credit insurance (Coface, Euler Hermes)
Title retention clause

Force Majeure Clause

Purpose: Suspend or terminate obligations when unforeseeable events make performance impossible.

Turkish Law Position: Turkish Code of Obligations recognizes force majeure (Article 136: impossibility of performance releases debtor).

Essential Elements of FM Clause:

Definition of Force Majeure: "Force Majeure means any unforeseeable event beyond the reasonable control of a Party, including but not limited to: acts of God, war, terrorism, riots, strikes, epidemics, pandemics, government actions, embargoes, natural disasters, earthquakes, fires, floods."
Exclusions:

Economic hardship
Lack of funds
Supplier failure (unless FM)
Labor disputes (if controllable)

Consequences: *"Upon occurrence of Force Majeure:

Affected Party's obligations are suspended
Notice must be given within [X] days
Parties shall negotiate in good faith
If FM lasts more than [90] days, either party may terminate"*

Mitigation Obligation: "The affected Party shall use reasonable efforts to mitigate the effects of Force Majeure."

COVID-19 Lesson: After the pandemic, many contracts now explicitly include "epidemic" and "government-ordered lockdowns" in FM definitions.

Hardship Clause (Imprévision / Aşırı Ifa Güçlüğü)

Different from Force Majeure: Performance remains possible but becomes excessively onerous due to unforeseen circumstances.

Turkish Law: Article 138 TBK recognizes hardship - judge may adapt or terminate contract if:

Extraordinary circumstances arose
Unforeseeable at contract time
Not attributable to either party
Performance becomes excessively difficult

Recommended Hardship Clause:

*"If, after conclusion of this Agreement, unforeseeable extraordinary circumstances occur that fundamentally alter the economic balance of the contract (including but not limited to: exchange rate variations exceeding 30%, significant inflation, import/export restrictions, sanctions), making performance excessively onerous for one Party, that Party may request renegotiation.

The Parties shall negotiate in good faith within 30 days. If no agreement is reached, the matter may be submitted to [arbitration/courts] for contract adaptation or termination."*

Practical Application:

Turkish Lira devaluation > 30%
Dramatic commodity price increases
New taxes or customs duties
Import/export restrictions

Limitation of Liability

Purpose: Cap financial exposure in case of breach or damages.

Key Elements:

Cap on Damages: "In no event shall either Party's aggregate liability exceed [X]% of the total contract price, or [€X], whichever is lower."

Typical Caps:

Services contracts: 100-200% of annual fees

Sales contracts: 50-100% of contract price

Technology licenses: 12-24 months of royalties

Exclusions from Cap: Certain liabilities cannot be capped. Ex. Fraud or willful misconduct, personal injury or death, Intellectual property infringement…