What is an agency agreement?

The agency contract, which is the subject of our review, is a type of contract established between the agency and the merchant. The agent is counted among the assistants of the merchant. For this reason, we find it appropriate to first make explanations about the trader and the agency.

According to Article 12 of the Turkish Commercial Code No. 6102:

"A person who operates a commercial enterprise, even partially, on his own behalf is called a merchant."

Again, the provision of the same law stating that legal entities can also be merchants is regulated as follows:

"Commercial companies, foundations, associations that operate a commercial enterprise to achieve their goals, and institutions and organizations established by the State, special provincial administrations, municipalities and villages and other public legal entities to be managed in accordance with the provisions of private law or operated commercially in accordance with their own establishment laws, are also considered merchants."

Trader assistants are divided into two groups: dependent and independent merchant assistants. The agency is included in the group of independent trader assistants and is regulated in the Turkish Commercial Code. According to the legal definition; A person who makes a profession of acting as an intermediary in contracts concerning a commercial enterprise on a permanent basis within a certain place or region or making them on behalf of that merchant is called an agent.

As can be understood from the above definition, the agency not only acts as an intermediary in contracts, but also has the authority to make contracts on behalf of the merchant.

As a result of developments aimed at improving commercial life, legal regulations have become inevitable. The old commercial law did not contain as detailed regulations on agency as the new TCC. However, the effects of the institution on commercial life and the benefits it provides have led to the necessity of making regulations in the new TCC. Because with the agency agreement, merchants expand their market environment and aim to reduce their financial burdens. Other trader assistants also contribute to expanding the market area, but it must be agreed that the most useful trader assistant in price-performance evaluation is the agent. As a matter of fact, as we will explain in detail below, the agency covers its own ordinary expenses, but can ask for a fee for the work it does. Therefore, as the merchant expands to different regions, he needs personnel, rent, etc. It also saves on necessities.

After these general explanations and definitions, we feel the need to touch upon special issues about agency under separate headings.

FORM OF AGENCY AGREEMENT

There is a provision in the law regarding how the agency agreement will be concluded. Therefore, there is no harm in establishing the contract in writing or verbally. Of course, in terms of proof, it is recommended that the contract be established in writing.

However, we would like to point out that in order for the agent to make a contract on behalf of the merchant, this authority must be given to him in writing. Written form here is a form requirement.

AGENCY'S RIGHTS

1- Agency's Wage Right

The agency has the right to demand fees for the work it performs within the scope of the contract. As we mentioned above, the agency agreement can be made verbally or in writing. For this reason, the main thing is that the wage is determined within the scope of the contract. However, if such a condition is not included in the contract or if the amount of the fee cannot be determined in oral contracts, this time the action is taken according to the commercial practice in the place where the agency is located. If there is no provision in commercial practice, the fee is determined by the judge.

The regulations in the law regarding the agency's right to remuneration are as follows:

The agency may request a fee for transactions established with its own efforts or with third parties it has brought in for transactions of the same nature, during the continuation of the agency relationship. This right to remuneration does not arise if and to the extent that it belongs to the previous agency in accordance with the third paragraph.

If a certain region or customer circle is left to the agency, the agency may also request a fee for transactions established with customers in this region or surrounding area without its own contribution during the continuation of the agency relationship. The second sentence of the first paragraph applies here as well.

Agency for transactions established after the end of the agency relationship;

1. If he has mediated the transaction or if he has prepared the transaction to the extent that the execution of the transaction can be attributed to his own efforts and if the transaction has been established within an appropriate period of time after the end of the agency relationship,
2. If the third party's request regarding a transaction for which a fee may be requested in accordance with the first sentences of the first or second paragraphs reaches the agency or the client before the termination of the agency relationship, the fee may be requested. If it is equitable to share this fee according to the circumstances and conditions, the next agency also receives an appropriate share.

The agency may also request a collection commission for the money collected in accordance with the instructions of its client.

a- Wage Entitlement Time

The agency is entitled to remuneration as soon as and to the extent the established transaction is fulfilled. The parties may change this rule with the agency agreement; However, when the principal completes the transaction, the agency is entitled to a suitable advance payment which can be requested on the last day of the following month. In any case, the agency is entitled to remuneration as soon as and to the extent that the third party carries out the established transaction.

If it becomes certain that the third party will not carry out the transaction, the agency's right to remuneration is lost; Paid amounts are refunded.

Even if it becomes certain that the principal will not fulfill the mediated contract partially or completely or as envisaged, the agency may request a fee. In case and to the extent that the contract cannot be fulfilled due to reasons that cannot be attributed to the client, the agency's right to remuneration is forfeited.

b- Time of Payment of the Fee

There is also a time limitation in terms of payment of the agency's fee. Namely; The agency's fee must be paid within 3 months at the latest from the date of birth of the fee and, in any case, on the date of termination of the contract.

2- Right to Request Extraordinary Expenses

As we mentioned above, the agency covers its own ordinary expenses such as wages paid to its employees, rent and bills. The client cannot claim any rights from the merchant for these. However, a legal regulation has been made regarding extraordinary expenses. According to Article 117 of the Turkish Commercial Code; The agency can only request payment of extraordinary expenses incurred in fulfilling its obligations.

It is necessary to evaluate what extraordinary expenses are according to the characteristics of the concrete case. For example, an agent's repair of a property belonging to his client may be considered an extraordinary expense.

3- The Agent's Right to Imprisonment

If the goods belonging to the client are sold by the agency in accordance with the contract or law, the agency may avoid paying the price of these goods.

If the client is incapacitated, the provisions of the first and second paragraphs also apply to the agency's receivables that are not yet due.

The provisions of the second paragraph of Article 950 and Articles 951 to 953 of the Turkish Civil Code are reserved. (TTK article 119)

4- Monopoly Right of the Agency

Unless otherwise agreed in writing, the client cannot appoint more than one agency for the same branch of trade in the same place or region. The same rule applies to the agency.

However, more than one agency can be appointed in the same place or region as long as it is agreed in writing.

DEBTS OF THE AGENCY

In addition to the above rights, the agency also has certain obligations towards its client. The agency's debts listed in the Turkish Commercial Code are as follows:

a-General Debts

The agency is obliged to handle the affairs of its client and protect its interests within the territory and trade branch left to it in accordance with the contract.

The agent is especially responsible for the damages suffered by the goods or belongings that it keeps on behalf of its client, unless it proves that it is perfect.

b- Obligation to Notify

The agency may delay the transaction until it receives an order on matters for which the client does not have clear instructions. However, if the situation is not suitable for taking instructions from the client due to the urgent nature of the work, or if the agent is authorized to act within the framework of the most beneficial conditions, he carries out the transaction according to his own opinion, like a prudent merchant.

c- Precautions

If there are indications that the goods received for the client's account have been damaged during transportation, the agency is obliged to have the damage determined and take other necessary measures in order to secure the client's right to sue against the carrier, to protect the goods as much as possible or, if there is a danger of complete destruction, to have it sold with the permission of the competent court in accordance with Article 108 of the Turkish Code of Obligations and to inform the client of the situation without delay. Otherwise, he/she will compensate for the damage that may occur due to his/her negligence.

If the goods sent to the agency for sale are perishable or will undergo changes that will reduce their value, and if the time is not suitable to receive instructions from the client or the client is delayed in giving permission, the agency is authorized to sell the goods in accordance with Article 108 of the Turkish Code of Obligations, with the permission of the competent court, and if the interests of the client require this, it is mandatory.

d- Payment Debt

If the agency is obliged to send or deliver the money belonging to its client but does not do so, it must pay interest from the date on which the obligation arises and, if necessary, also provide compensation.

e- Non-Competition Debt

Apart from these, the agency is under the obligation not to compete for the duration of the contract unless otherwise agreed in writing.

AGENCY'S AUTHORITY OF REPRESENTATION

The agency is authorized to make and accept, on behalf of its client, any right-protecting declarations such as warnings, denunciations and protests regarding the contracts it mediates or concludes.

Due to disputes arising from these contracts, the agency can file a lawsuit on behalf of its client, or a lawsuit can be filed against itself in the same capacity. Terms contrary to this provision in contracts regarding those acting as agencies on behalf of foreign traders are invalid.

Decisions taken as a result of lawsuits to be filed in Türkiye against the persons on whose behalf and account the agencies act cannot be applied to the agencies.

Without the client's special and written permission or power of attorney, the agency is not authorized to accept the price of goods that it has not delivered personally, to receive goods that it has not paid for personally, and cannot renew or reduce the amount of the receivables arising from these transactions.

Agency's Authority to Make Contracts

The agency is not authorized to conclude a contract on behalf of its client without obtaining a specific and written authorization.

Documents that authorize agencies to make contracts on behalf of their clients must be registered and announced by the agency.

Unauthorized Contract by the Agency

If the agent makes a contract on behalf of his client, without authority or exceeding the limits of his authority, his client may give permission as soon as he is informed of this; If it does not, the agency will be responsible for the contract.

TERMINATION OF AGENCY AGREEMENT

First of all, it should be noted that the death, restriction or bankruptcy of one of the parties are among the general reasons that terminate the contract. In addition, there are also special termination forms, which we will discuss in detail below.

Agency contracts can be made for a definite or indefinite period. A fixed-term contract ends with the expiration of the term. If a fixed-term contract is continued despite the expiration of the term, it turns into an indefinite-term contract.

The agency agreement can be terminated by termination like other agreements. In an indefinite-term contract, the parties can terminate the contract by giving a notice of termination 3 months in advance.

Both types of contracts can be terminated immediately if there are justified reasons. Here, a period of 3 months will not be required and immediate termination will be possible. What justified reasons are is not listed in the law. However, some justified reasons that have been the subject of the Supreme Court's jurisprudence are as follows:

1. One of the contracting parties has the obligation to stop or stop its activities for an unreasonable period of time,
2. One of the contracting parties engages in activities that are directly or indirectly harmful to the other party,
3. Default on paymentsdefault despite a written warning.

The Supreme Court HGK's evaluations on the subject are as follows:

"Since the agency contract is a contract that creates a permanent debt relationship, it is terminated, as a rule, for reasons related to this nature, like other contracts that create a permanent debt relationship. However, a significant part of the reasons for the termination of the agency contract, together with its special consequences, are regulated specifically for agency both in Law No. 6762, which must be applied to the concrete case, and in Law No. 6102. In cases where there is no provision here for termination, intermediary agencies Brokerage contract provisions, commission provisions for contracting agencies, and in cases where there is no provision in these, power of attorney provisions will apply (Law No. 6762 art. 116/2).

The agency contract can be concluded expressly or in a way that can be derived from the purpose and conditions of the contract, for a limited period or for an indefinite period (indefinite period). A fixed-term agency contract normally terminates automatically upon expiry of the period. An agency contract concluded for a definite period becomes indefinite, with the agreement of the parties or if it continues to be implemented despite the expiration of the period (Law No. 6102 Art. 121/2). Since the agency agreement is a contract that creates a permanent debt relationship, it is possible to terminate it by termination for either a definite or indefinite period. Because termination is an opportunity that completely ends the continuous debt relationship, regardless of whether the contract is for a definite or indefinite period.

Termination of the agency contract is stated in Article 133/1 of Law No. 6762 (Article 121/1 of Law No. 6102); It is regulated as follows: "Each party may terminate the agency agreement, which has been concluded for an indefinite period, provided that it gives three months' notice; even if a period is determined by the agreement, the contract may be terminated at any time due to specific reasons." Accordingly, in case of a justified reason, either party may terminate an agency agreement for a definite or indefinite period at any time. Termination for justified reasons, called extraordinary termination, terminates the agency contract for a definite or indefinite period prematurely, based on contractual or legal reasons, with prospective effect. Just cause refers to the facts and events that make it unbearable and unbearable for the party exercising the right of termination to continue the agency contract within the framework of the rule of honesty.

In agency contracts established for an indefinite period or for an indefinite period, each party has the opportunity to terminate the contract provided that it gives three months' notice. In this termination, which is called ordinary termination, each party terminates the agency agreement with prospective effect, with a unilateral, directed declaration of will, without needing to rely on a reason. The three-month period is the minimum period granted to the parties to liquidate the consequences of termination and prepare for the termination; It cannot be shortened but can be extended (H. Ülgen, ... Helvacı, A. Kaya, F. Nomer E., Commercial Enterprise Law, ..., 2015, p. 812). As a rule, fixed-term contracts cannot be terminated through ordinary termination; However, if there is a provision to this effect in the contract, it is possible to terminate the contract by ordinary termination. Indeed, in accordance with the principle of freedom of contract, the parties also have the freedom to conclude the contract, to choose the counterparty of the contract, to edit or change the content of the contract, to determine the form to which the contract will be subject, and finally not to be bound by the contract, that is, to terminate the contract.

Although the ordinary termination of the agency contract does not have to be based on a reason, the prohibition of material abuse of rights limits this possibility. Since the obvious abuse of the right of termination (such as creating trust in the other party to continue the contractual relationship and then resorting to termination) will not be protected by the legal order, there may be a claim for compensation in cases where the right of termination is abused.

Causing harm to someone else by using a right contrary to the rule of honesty clearly constitutes abuse of the right. Article 2 of the Turkish Civil Code No. 4721 orders everyone to exercise their rights in accordance with the understanding of honesty, honesty and mutual trust required by business relations valid in society. The criterion for the use of the right must also be determined according to the rules of honesty. In addition, there is no need to investigate whether the rightful owner acted with the intention of harming someone else. What is important is not the intention to harm someone else, but the fact that someone else was harmed as a result of the use of the right contrary to the rules of honesty.

The rule of honesty that must be followed in the exercise of all rights and the performance of debts and the prohibition of abuse of rights, which constitute the general boundaries of rights, are rules imposed due to the needs and requirements of public order. For this reason, Article 2 of Law No. 4721 is mandatory. It is not possible for the parties to decide that the rule of honesty and the prohibition of abuse of rights will not be applied in the relationship between them. Any behavior that violates the rule of honesty or the prohibition of abuse of rights constitutes an objection because it directly eliminates the existence of the right. For this reason, if the judge detects behavior that violates the rule of honesty and constitutes abuse of rights, based on the information and documents in the case file, he should automatically take this into consideration, even if it is not put forward by the person concerned." K. 2023/669

CONSEQUENCES OF TERMINATION OF THE AGENCY AGREEMENT

The party who terminates the contract without a justified reason or without complying with the three-month notice period is obliged to compensate the other party for the damage suffered due to the non-completion of the started works.

If the agency contract is terminated due to the death, incapacity or bankruptcy of the client or the agent, an appropriate compensation to be determined in proportion to the amount of fee to be given to the agency upon completion of the works will be given to the agency or those who replace it in accordance with the cases written in this article.

The agency may also request equalization after the termination of the contract. We will mention this issue under a separate heading due to its importance.

Again, if there is a competition agreement made between the parties while the contractual relationship continues, the fee in return may be requested by the agency from its client. A separate title will be opened for this subject.

AGENCY'S REQUEST FOR EQUALIZATION

According to Article 122 of the Turkish Commercial Code:

After the termination of the contractual relationship;

1. If the client obtains significant benefits even after the termination of the contractual relationship, thanks to the new customers found by the agency,
2. As a result of the termination of the contractual relationship, the agency loses its right to claim the fee it would have earned if the contractual relationship had continued, for the work done or to be done in a short time with the customers brought into the business by the agency, and
3. When the characteristics and conditions of the concrete incident are evaluated, the agency may request appropriate compensation from the client, if the payment is equitable.

Compensation cannot exceed the average of the annual commissions or other payments received by the agency as a result of its activities in the last five years. If the contractual relationship has continued for a shorter period, the average during the continuation of the activity is taken as basis.

If the agency terminates the contract without any action of the client that would justify the termination, or if the contract is terminated by the client for justified reasons due to the fault of the agency, the agency cannot request equalization.

The equalization request cannot be waived in advance. The right to request equalization must be asserted within one year following the termination of the contractual relationship.

This provision is also applicable in case of termination of exclusive distributorship and other similar permanent contractual relationships giving monopoly rights, unless it is against equity.

The opinions of Istanbul BAM 14th Legal Chamber regarding the equalization request are as follows:

"In order for the agency to claim portfolio compensation, four conditions must be met: 1-The agency contract must have ended in a way that requires equalization, 2-After the agency contract has ended, the client continues to obtain significant benefits from the new customer circle created by the agency's efforts, 3-Due to the termination of the contract, the agency has lost the opportunity to earn income from the new customer circle it has transferred to its client, 4-The payment of equalization to the agency must be equitable (a requirement of equity) (Özge Ayan, Agency's Right to Request Equalization, Seçkin Yayınları, Ankara 2008, p. 146 et al.; A. Kaya, Commercial Law Commentary - First Book Commercial Enterprise - Seventh Part - Agency, 2nd Edition, Istanbul 2016, p.247 et al.). According to this explanation, the court prioritized these four. It must be determined whether the condition is met. After that, if the conditions are met, the calculation of the receivable should be started. In this case, a calculation method should be applied based on the comparative law and the regulation in Article 122 of the Turkish Commercial Code No. 6102 and the practice of the Supreme Court. The basis of the equalization request is that the new customer circle created by the agency (in our case, the dealer) is transferred to the client when the contractual relationship ends. The basis is that the customer circle has an economic value. Therefore, the new customer circle created should be determined first. The newly created customer circle should be determined in three stages: There is a basic rule here: The client's benefit is equal to the agency's wage loss. Therefore, it would be appropriate to first calculate the agency's income loss, based on the principle that the principal's benefit is equal to the agency's income loss.When making this calculation, the fees that correspond to the basic performance of the agency should be taken as basis and the net income after deducting the costs should be taken as basis. Incidental fees paid to the agency should not be taken into account in this calculation. The agency must have a one-year income loss. In order to calculate both the amount of benefit that the client will receive and the total amount of income that the agency will be deprived of, it is necessary to estimate how long the new customer circle will have a commercial relationship with the client, according to the characteristics of the concrete case. Then, the annual customer loss rate is determined, taking into account the nature of the business and the data during the period during which the agency relationship continues. A discount is made on the customer churn rate from the amounts determined for each year, based on the client's estimated relationship period with new customers. The losses for each year are summed. Considering that the agency will receive the equalization receivable in cash, an interest deduction is made on this raw receivable and the raw receivable in the first stage is found. In the second stage, an equity audit is carried out. At this stage, the upper limit is not taken into account. Depending on the characteristics of the concrete event, the receivable amount may be reduced or increased in accordance with the principle of equity. For example, if the recognition of the client's brand has been effective in the formation of a new customer circle, an appropriate discount should be made on the receivable amount. If the agency has made extraordinary efforts and carried out significant advertising and promotional activities, the amount of the receivables may be increased due to fairness. By applying the fairness measure, the agency's equalization receivable is calculated. In the third stage, it is checked whether the calculated equalization receivable exceeds the legal upper limit. If it is below the upper limit, the calculated receivable is ruled as it is; If it exceeds the upper limit, the receivable amount is reduced to the upper limit and entered into judgment. The upper limit of the equalization request is 122/2 of the Turkish Commercial Code No. 6102. It is defined in the article as follows: "Compensation cannot exceed the average of the annual commission or other payments received by the agency as a result of its last five years of activity. If the contractual relationship has continued for a shorter period, the average during the continuation of the activity is taken as basis." In calculating the upper limit, unlike the calculation in the first step, all kinds of income of the agency should be included in the calculation and gross income should be taken as basis. Since the upper limit is a regulation that limits the agency's claim, it would be equitable to make the calculation in this way." K. 2022/377

PROHIBITION OF COMPETITION IN AGENCY AGREEMENT

We have made statements in many places above, claiming that there will be a non-competition clause between the agency and its client as a natural consequence of the contract and for the duration of the contract. Again, we have statements that this ban can be lifted (while the contractual relationship continues) provided that it is agreed upon in writing by the parties.

The non-competition agreement here relates to the period after the termination of the agreement. It should be noted that this contract can only be made by the client and in writing. Because Article 123 of the Turkish Commercial Code is regulated as follows:

The agreement that limits the agency's business activities after the termination of the contractual relationship must be made in writing and a document containing the terms of the agreement and signed by the principal must be given to the agency. The agreement can be made for a maximum period of two years from the end of the relationship and can only concern the territory or customer circle left to the agency and the issues related to the contracts it brokered. Due to the restriction of competition, the client must pay appropriate compensation to the agency.

The client may waive the application of the competition restriction in writing until the termination of the contractual relationship. In this case, the client is relieved of his obligation to pay compensation after six months have passed since the declaration of renunciation.

If one of the parties terminates the contractual relationship for justified reasons due to the faulty behavior of the other party, it may notify the other party in writing that it is not bound by the competition agreement within one month from the termination.

Conditions contrary to this article are invalid to the extent they are against the agency.