NON-LIABILITY CLAUSES IN COMMERCIAL SALES 29 September 2020

1. COMMERCIAL SALES CONTRACT

A sales contract is a contract in which one party owes the ownership of the contractual property to the other party and the other party owes some money in return. As a result of the commercial activities developing in modern life, the content, form, and parties of the sales contract have developed in parallel with the needs of commercial life. The fact that merchants have to deal with their transactions quickly, simply and quickly, as a requirement of commercial life, has created a kind of sales contract that can be described as "commercial sales contracts". For this reason, in addition to sales contracts that are under the Turkish Code of Obligations ("TCO"), several regulations are included within the scope of the Turkish Commercial Code ("TCC").

As a rule, a commercial sales contract is a contract in which at least one of the parties to a contract is a merchant and concerns the commercial enterprise of the merchant. Nevertheless, there may be cases where the contract cannot be considered commercial although both parties are merchants. For example, the sale of a table made for personal use is not related to the commercial enterprises of both merchants. Besides, in cases where only one party is a merchant, there is no commercial sale when the merchant reports that it is not related to the commercial enterprise at the time of concluding the contract, or when the business is not suitable for commercialization.

Since the commercial sales contract has a special feature, a special arrangement is included in the 23rd article of the TCC. However, as explained above, although not all the party of the contract is required to be merchants for a commercial sales contract, both parties must be merchants to apply Article 23 of the TCC. According to the 1st paragraph of the relevant provision: "Provided that the special provisions of this article are reserved, the provisions of the Turkish Code of Obligations regarding the sales contract and the goods exchange agreement are also applied in the sales and exchange of goods between merchants." Accordingly, every legal issue, including the release of liability, that does not fall within the scope of Article 23 will be examined within the scope of the TCO.

2. NON-LIABILITY IN COMMERCIAL SALES

A release of liability is an agreement that completely or partially prevents a claim for damages that may arise as a result of an infringement of contract or as a result of a tort, and must be made before the damage occurs. Release of liability, which eliminate the responsibility arising from the breach of the contract, are mostly established in practice as ancillary agreements added to the main contract. For this reason, in cases where the main contract are invalid for any reason, for example, because it is against the mandatory provisions, the release of liability is also void.

The Code of Obligations does not stipulate a special form requirement for releasing liability. In this case, the release of liability is possible for the parties with mutual and appropriate declarations of will by the principle of freedom of form stipulated in Article 11 of the TCO.

In particular, agreements that eliminate liability in the event of a breach of contractual obligations do not eliminate or limit the debtor's obligation to fulfill the contract and the duty of care required to fulfill this action. Release of liability excludes the debtor's liability to indemnify damages only in the event of a breach of principal obligation and duty of care.

The general provision regulating the release of liability in TCO is Article 115. However, in articles 214/3 and 221 of the TCO, the legislator has introduced special rules regarding the agreements defect and seizure liability in sales contracts. Since these articles are special aspects of the general rule in the TCO, they primarily apply to sales contracts and therefore commercial sales contracts.

According to the mentioned provisions; the parties may freely decide to what extent the seller's liability will be eliminated in case of defect and seizure in the sales contracts. Liability can be removed or mitigated only within certain limits. However, the freedom of the parties regarding the release of liability is not unlimited. TCO imposes some limitations on such agreements. Under Article 115, the prior agreement that the borrower will not be liable for its gross negligence is null and void. In line with the current general provision, in Article 221, it was stated that the agreements that remove the responsibility of the seller, who is seriously faulty in transferring the sold as defective, will be void. Besides, in 214/3, it is regulated that the agreements that abolish or limit the responsibility of the seller who has concealed the rights of the third party in case of seizure shall be null and void.

A gross fault is a state of imperfection involving intent and gross negligence. Whereas a person deliberately and willingly acts contrary to the law (debt), gross negligence is when a person does not show the attention and care that any person should show under the same conditions. It will be appreciated by the judge whether there is a serious fault in each concrete case.

3. NON-LIABILITY IN GENERAL TERMS AND CONDITIONS

In practice, especially in commercial sales, it is very common that the release of liability is arranged as general terms and conditions. The non-liability conditions stipulated as general terms and conditions are not only within the scope of the fault, limiting the optional rights in favor of the customer, specifying the situations that would not normally constitute force majeure as force majeure, giving the customer the authority to request only a certain part of the damage he has suffered (for example, holding the debtor only responsible for the actual loss excluding the remaining profit from responsibility) may also appear in the form of shortening the limitation period.

The fact that a contract contains general terms and conditions does not directly render it invalid. However, the legislator has taken some measures to protect the weak contractual party against the general transaction conditions. Article 21/1 of TCO states that "the general terms and conditions that are contrary to the benefit of the other party are included in the scope of the contract, the organizer provides the opponent with the opportunity to inform the other party about the existence of these conditions and to learn the content of these conditions and the other party accepts these conditions. Otherwise, the general transaction conditions are deemed not written".

Accordingly, the conditions that remove the liability of the seller against defects and seizures in the sales contracts are against the buyer. In this case, the release of liability, which is arranged in the form of general terms and conditions, can only be valid if the seller informs the buyer about this issue and allows learning the content of the responsibility condition. Otherwise, the condition of release of liability will be deemed not written, in other words, it will be considered as non-existent.

Besides, it should be emphasized that the basic terms of the release of liability will also apply to the release of liability conditions added to the contracts as general terms and conditions. Therefore, it is not possible to place a condition of non-liability in cases where it is prohibited to release of liability with a special provision with conditions based on the gross fault of the debtor. Nevertheless, where the liability of the debtor is based on the consent of the law or a competent authority, or where the creditor is in the service of the debtor, no record of non-liability shall be imposed.