Commercial Contract Breach: Legal Remedies and Damages in Turkey

Contract disputes top the commercial court docket in Turkey. With commercial court workloads increasing and proceedings lengthening, parties facing a breach need a clear understanding of their legal options. This guide covers the remedies available, damages claims and process management.

What Is a Contract Breach?

A breach occurs when a party fails to perform a contractual obligation — whether entirely, partially or with delay. The most common types of commercial breach include:

• Failure to deliver goods or services, or delayed delivery
• Non-payment or underpayment
• Breach of confidentiality obligations
• Violation of non-compete clauses
• Breach of warranty and indemnity provisions

First Steps on Discovering a Breach

1. Evidence Preservation and Documentation

Immediately preserve all correspondence (emails, messages), contract documents, payment records and any events that may require witness testimony. Evidence forms the foundation of your legal claim.

2. Formal Notice (İhtarname)

Sending a formal notice via notary both grants the other party time to perform and serves as a good-faith record in subsequent proceedings. The notice must clearly state the breach, the demands and the legal steps that will follow if not remedied.

3. Negotiation and ADR

Many commercial contracts contain mediation or arbitration clauses. Since 2023, pre-litigation mediation has been mandatory for commercial disputes in Turkey. This process can deliver a faster, lower-cost resolution.

Litigation: Damages Claims

Where negotiation and mediation fail, proceedings may be brought before the commercial court. The principal damages heads available include:

• Positive damages: The benefit that would have been obtained had the contract been performed — including lost profits
• Negative damages: Expenditure incurred in reliance on the contract
• Contractual penalty: Where provided in the contract; the court has discretion to reduce it
• Default interest: Commercial interest rate applies to commercial transactions

Precautionary Attachment (İhtiyati Haciz)

Where there is a risk that the other party may conceal or transfer assets, a precautionary attachment order can be obtained before litigation. This secures your claim and requires swift action.

Arbitration

International commercial contracts frequently include arbitration clauses referring disputes to institutional arbitration (ICC, LCIA, ISTAC — Istanbul Arbitration Centre). Arbitration offers confidentiality, speed and ease of international enforcement.