This article explains when the CISG governs sales with Turkish companies, and what foreign buyers and sellers should know about notice, avoidance and damages.
Foreign companies buying from or selling to Turkish counterparties often assume that a contract stating "Turkish law applies" will be governed by the Turkish Code of Obligations and the Turkish Commercial Code. In most international sales of goods, it will not. Türkiye has been a party to the United Nations Convention on Contracts for the International Sale of Goods (CISG) since 1 August 2011, and the Convention forms part of Turkish law. For a foreign party, this is largely good news: the CISG is an internationally familiar text, applied in a broadly consistent way by courts and tribunals around the world. It does, however, carry its own rules on notice, avoidance and damages, and opting out of it without understanding the alternative can expose a foreign buyer to some of the shortest notice periods in commercial law. This article explains how the CISG applies to sales with Turkish companies and what foreign buyers and sellers should take into account.
1. When the CISG Governs a Sale with a Turkish Company
The CISG applies to contracts for the sale of goods between parties whose places of business are in different states (Article 1). In practice, it governs a sale with a Turkish company in two situations:
- Both parties are in Contracting States. Most of Türkiye's main trading partners, including Germany, Italy, France, Spain, the Netherlands, the United States, China and Russia, are parties to the CISG. A sale between a Turkish company and a company in one of these countries is governed by the CISG unless the parties exclude it.
- The conflict rules point to Turkish law. Even where the foreign party's country is not a Contracting State, the CISG can apply if the contract is governed by Turkish law, because the Convention is part of Turkish law for international sales.
Some important trading nations remain outside the Convention, notably the United Kingdom and India. For sales with companies there, whether the CISG applies will depend on the governing law chosen or determined under the conflict rules.
The CISG does not cover every sale. Goods bought for personal or household use, sales by auction or on execution, securities, ships, aircraft and electricity are excluded (Article 2). Contracts for goods to be manufactured are covered, unless the buyer supplies a substantial part of the materials or the seller's obligations consist mainly of services (Article 3). The CISG also does not deal with the validity of the contract or the transfer of ownership (Article 4).
2. Choosing Turkish Law Does Not Exclude the CISG
Because the CISG is part of Turkish law, choosing Turkish law to govern an international sale means choosing the CISG. Parties who want domestic Turkish sales law to apply must exclude the Convention expressly (Article 6), for example: "This contract shall be governed by Turkish law, excluding the United Nations Convention on Contracts for the International Sale of Goods (CISG)."
Foreign buyers should think carefully before agreeing to such a clause. Under the Turkish Commercial Code, a buyer in a commercial sale must notify an apparent defect within two days of delivery and, for defects that are not apparent, must inspect the goods or have them inspected within eight days of delivery and notify any defect found (Article 23). For a buyer receiving goods in another country, often through a chain of carriers and warehouses, these periods can be very difficult to meet. Under the CISG, by contrast, the buyer must give notice within a reasonable time. Excluding the CISG in favour of Turkish domestic law can therefore shift the balance significantly in favour of the Turkish seller.
Conversely, a foreign seller dealing with a Turkish buyer may find the shorter Turkish notice periods attractive. Either way, the choice should be a deliberate one.
3. Formation and the Battle of the Forms
Under the CISG, a sales contract need not be in any particular form and may be proven by any means, including witnesses (Article 11). Contracts with Turkish companies are frequently formed through an exchange of quotations, purchase orders, order confirmations and pro forma invoices rather than a single signed document.
Where each side refers to its own general terms, the CISG's rule on the "battle of the forms" applies: a reply that materially alters the offer is a counter-offer, not an acceptance. Changes relating to price, payment, quality and quantity, place and time of delivery, liability and dispute settlement are material (Article 19). Foreign parties should make sure their order confirmations refer to their own terms and expressly reject the counterparty's terms, and should not assume that standard terms printed on the back of a Turkish invoice have no effect.
4. Notice of Non-Conformity
The buyer must examine the goods within as short a period as is practicable in the circumstances (Article 38) and notify the seller of any lack of conformity, specifying its nature, within a reasonable time after discovering it or when it ought to have been discovered (Article 39(1)). In any event, the buyer loses the right to rely on a lack of conformity if it does not give notice within two years of the date on which the goods were actually handed over, unless a contractual guarantee provides otherwise (Article 39(2)).
What counts as a "reasonable time" depends on the goods and the type of defect, but international case law often measures it in weeks rather than months. The notice must identify the problem specifically; a general complaint is not enough. A seller cannot rely on late notice where the non-conformity relates to facts it knew or could not have been unaware of and did not disclose (Article 40). Foreign buyers are well advised to set out concrete inspection and notice periods in the contract rather than relying on the open-ended standard.
5. Fundamental Breach and Avoidance
The CISG is designed to keep contracts alive. A party may avoid the contract only for a fundamental breach by the other side, or where the other side fails to deliver or pay within an additional period fixed for performance (Articles 49 and 64). A breach is fundamental if it substantially deprives the other party of what it was entitled to expect under the contract (Article 25).
Defective goods do not automatically amount to a fundamental breach. Where the defect can be remedied, or the goods can still be used or resold at a reduced price, avoidance may not be available. Replacement goods can likewise be demanded only for a fundamental breach (Article 46(2)). Instead, the buyer can require repair, fix an additional period for performance or reduce the price (Articles 46 to 50), and the seller has a right, within limits, to remedy defects at its own expense even after the delivery date (Article 48). Avoidance must be declared by notice to the other party (Article 26) and can be lost if not exercised within a reasonable time.
Parties who regard particular delivery dates or specifications as essential should say so expressly in the contract, so that any failure clearly qualifies as a fundamental breach.
6. Damages: Strict Liability, Capped by Foreseeability
- No fault requirement: liability for breach does not depend on fault. A party is exempt only if it proves that the failure was due to an impediment beyond its control that it could not reasonably have been expected to take into account at the time of contracting or to avoid or overcome (Article 79).
- Foreseeability: damages cover the loss suffered, including loss of profit, but are limited to the loss the breaching party foresaw or ought to have foreseen at the time of contracting (Article 74).
- Substitute transactions: after avoidance, the buyer may recover the difference between the contract price and the price of a reasonable substitute purchase, or the current market price if no substitute transaction is made (Articles 75 and 76).
- Mitigation: the injured party must take reasonable measures to mitigate its loss; damages are reduced by the amount that could have been avoided (Article 77).
- Interest: interest is due on late payments (Article 78), but the CISG does not fix the rate; it is determined by the applicable national law.
7. What the CISG Leaves to Turkish Law
The CISG does not govern the whole sales relationship. Validity of the contract, transfer of title, authority to sign, the enforceability of penalty and limitation of liability clauses, and limitation periods are left to the national law applicable under the conflict rules. Where that is Turkish law, the Turkish Code of Obligations and the Turkish Commercial Code fill these gaps. Foreign parties should therefore not assume that a liability cap or liquidated damages clause drafted under their own law will operate in the same way.
Incoterms work alongside the CISG. An Incoterms rule incorporated into the contract takes precedence over the CISG's default rules on delivery and the passing of risk.
On payment, the Turkish restriction on agreeing prices in foreign currency applies only to contracts between Turkish residents. A sale between a Turkish company and a foreign company with no place of business in Türkiye may be priced and paid in euros or dollars. The position changes if the foreign party contracts through a Turkish subsidiary or branch, as we explained in this article.
8. Practical Recommendations for Foreign Buyers and Sellers
- Decide deliberately whether the CISG should apply, and say so expressly in the contract.
- If you are a foreign buyer, be cautious about excluding the CISG in favour of Turkish domestic law, and understand the short inspection and notice periods that would then apply.
- Set concrete periods, form and recipients for inspection and notice of defects, rather than relying on "reasonable time".
- Define which delivery dates and specifications are essential, so that a failure clearly amounts to a fundamental breach.
- Draft liability caps, exclusions of indirect loss and liquidated damages with the limits of Turkish law in mind where Turkish law fills the gaps.
- Standardise your order and confirmation process to win the battle of the forms.
- Choose a dispute resolution mechanism. International arbitration is common in cross-border sales, but the clause must be drafted carefully to be enforceable before Turkish courts, as we discussed in this article.
9. Conclusion
For foreign companies trading with Türkiye, the CISG is often the law governing their contracts, whether or not they realise it. The key points can be summarised as follows:
- Türkiye has been a party to the CISG since 1 August 2011; sales with companies in most of its main trading partners are governed by the Convention unless it is excluded.
- Choosing Turkish law does not exclude the CISG; exclusion must be express.
- Excluding the CISG in favour of Turkish domestic law exposes the buyer to two-day and eight-day inspection and notice periods under the Turkish Commercial Code.
- Under the CISG, notice must be given within a reasonable time and at the latest within two years of handover.
- Avoidance is available only for fundamental breach or failure to perform within an additional period.
- Damages are not fault-based but are capped by foreseeability; validity, limitation and liability clauses are left to national law.
For advice on international sale and supply contracts with Turkish companies, CISG disputes over non-conformity, avoidance and damages, and litigation and arbitration arising from cross-border trade, please contact us at info@guzeloglu.legal.