The main novelties and changes brought by the New TCC are as follows:
- The provisions regarding the right to commission of the agency are regulated in more detail. Pursuant to the Article 113/3 of the New TCC, the agent may request a commission regarding the agreements concluded after the termination of agency relation and this can be called as a post-termination commission.
- The current Turkish Commercial Code (herein after referred to as ‘TCC’) Article 122 used to regulate that where the agents conclude a contract on behalf of the principal, even though he was not authorized to do so or by exceeding its limits of authorization, and if the principal does not want to be bound with this contract, he must immediately inform the third party of the situation. If he does not serve such a notification immediately, then he will be considered as he has given consent to the transaction and be personally liable from the contract. This principle is abandoned in the New TCC. Pursuant to the Article 108 of the New TCC, the principal will be bound with the agreement only if he gives its explicit consent. In case that the principal does not give its consent, only the agency will be bound with the relevant agreement.
- The New TCC provides a list of obligations of the principal under the Article 120, however under the TCC only the obligations of the agency were listed. The relevant regulation aims to protect the interests of the agents.
- Another novelty concerns the duration of the agency agreements. Pursuant to the Article 121/2 of the New TCC, in case that an agency agreement for a fixed period, which continues to be performed by both parties after that period has expired, shall be deemed to be converted into an agency agreement for an indefinite period.
- The goodwill compensation was not regulated under the TCC. There were discussions in the doctrine concerning the claims of goodwill compensation. Since, the goodwill compensation is not explicitly regulated under the agency provisions; the only way in this purpose was the judge to fulfill the legal gap by applying the Turkish Civil Code Article 1. Thus, in practice the good will compensation was established by the court decisions in Turkey.
Accordingly, the New TCC regulates the goodwill compensation which already started to be applied by the courts in practice. Pursuant to Article 122 of the New TCC;
(1) The commercial agent shall be entitled to a reasonable compensation upon termination of the agency agreement if:
- he has brought the principal new customers and the principal continues to derive substantial benefits from the business with such customers, and
- he is deprived of the commission that he would be entitled to if the agency agreement was not terminated and that arises out of agreements entered into or will be entered into within a short time between the principal and third parties introduced by the commercial agent’s activities,
- the payment of this compensation is equitable having regard to all the circumstances.
(2) The amount of the compensation may not exceed a figure equivalent to a compensation for one year calculated from the commercial agent’s average annual remuneration over the preceding five years and if the agreement goes back less than five years the compensation shall be calculated on the average for the period in question.
(3) The compensation shall not be payable where the commercial agent has terminated the agency agreement unless such termination is justified by circumstances attributable to the principal or the principal has terminated the agency agreement because of default attributable to the agent.
(4) The parties may not derogate from right to compensation to the detriment of the agent before the agency agreement expires. The compensation shall be claimed by the agent within one year after the termination of the agency agreement.
(5) The provisions of this Article shall also be applicable to the exclusive distribution agreements and other continuous agreement relationships granting an exclusive right, as long as the situation shall not be against good faith.
- The New TCC also regulates the non competition agreement. According to the Article 123 of the New TCC;
(1) An agreement restricting the business activities of a commercial agent following termination of the agency agreement is valid if it is concluded in writing and a written document bearing the provisions of the agreement and signed by the principal is given to the agent. Such agreement shall be valid for not more than two years after termination of the agency agreement and shall relate to the geographical area or the group of customers entrusted to the commercial agent and to the kind of goods covered by the agency agreement. The principal shall pay an appropriate compensation to the agent due to the restraint of trade.
(2) The principal may withdraw from the application of restraint of trade clause in writing until the termination of the agency agreement. In that case, the principal is relieved from the obligation to pay compensation after six months from the withdrawal.
(3) In the event that one of the parties terminate the agency agreement for reasons attributable to the faulty acts of the other party, he may notify the other party within one month after the termination that he is not bound by the restraint of trade clause.
(4) The conditions contrary to this provision are null and void to the extent that they are to the detriment of the agent.
Ercument Erdem, IDI agency & distribution country expert for Turkey.