Contracts Law
This section covers the core institutions of the law of obligations — from contract formation to termination, from performance to adaptation. The articles are prepared in light of the Turkish Code of Obligations (No. 6098).
Termination of Contract: Distinctions Between Termination, Rescission and Conversion
Creditor's elective rights on debtor default — TBK m.125-126
How is a contract terminated, and what is the difference between rescission and termination? Application of TBK m.126 in continuous contracts and the concept of conversion.
In terminating a contract, the concepts of 'termination' (fesih) and 'rescission' (dönme) are often used interchangeably, but their legal consequences differ. Rescission ends the contract with retroactive effect (ex tunc); termination ends it with prospective effect (ex nunc). The distinction is critical for the scope of restitution and damages.
Creditor's Elective Rights on Default — TBK m.125
TBK m.125 grants the creditor three elective rights in synallagmatic contracts upon the debtor's default: (i) to demand actual performance and delay damages; (ii) to declare immediate renunciation of performance and demand positive damages in lieu; (iii) to rescind the contract and seek negative (reliance) damages.
Exercise of these rights generally requires that the creditor have granted the debtor a reasonable additional period and that the period have lapsed in vain (TBK m.123). Where the debtor has expressly declared an intention not to perform, where performance has become useless, or where the contract is one with a fixed date, no additional period is required (TBK m.124).
Rescission — Retroactive Unwinding
Rescission is a unilateral right of constitutive effect; it takes effect upon reaching the other party. Rescission causes the contract to be treated as if never concluded, and the reciprocal performances are restored under the rules of unjust enrichment.
On rescission the creditor may claim damages for invalidity of the contract — that is, negative damages (TBK m.125/3). Negative damages cover losses that would not have arisen but for the contract: for instance, expenses incurred under the contract or other opportunities forgone.
Termination — Prospective End and TBK m.126
Termination is a unilateral legal act bringing a continuing obligation to an end with prospective effect. In lease, service, mandate, work and other continuous or periodic-performance contracts, one does not 'rescind' but 'terminate'.
TBK m.126 lays down an important rule: in continuous-performance contracts on which performance has begun, on the debtor's default the creditor exercises termination instead of rescission. Such termination preserves the right to claim damages for the contract's premature end (positive damages).
Conversion — Change in the Nature of the Obligation
'Conversion' (Umwandlung) refers to the situation where, the creditor having opted for damages in lieu of performance, the original obligation is replaced by a damages obligation. The contract is not entirely extinguished; rather, the principal performance is replaced by a monetary debt.
An important consequence of conversion: ancillary obligations attached to the original performance (security, penalty, interest) continue, in principle, in the new obligation. After conversion, maturity, interest and limitation are calculated from the new obligation.
Practical Considerations
In contractual disputes, not only the signed text but also offer correspondence, revision history, invoices, delivery records, payment records, formal notices and the parties' subsequent conduct are taken into account. The formation, performance and termination of a contract often acquire meaning only through these ancillary documents.
Form requirements, authority of representation, penalty clauses, exclusion-of-liability provisions, standard terms and consumer-protection rules may all affect the validity or enforceability of a contract. In standard-form documents in particular, the other party must be informed, express acceptance obtained, and onerous provisions specifically highlighted.
Before any dispute arises, the scope of obligations, delivery date, defect notice, default notice, interest and competent-court clauses should be drafted explicitly. Vague provisions may give rise to interpretation disputes and to difficulties of proof later on.
Relevant Statutory Provisions
- TBK m.117Default of the debtor
Original (Turkish, official):
MADDE 117- Muaccel bir borcun borçlusu, alacaklının ihtarıyla temerrüde düşer. Borcun ifa edileceği gün, birlikte belirlenmiş veya sözleşmede saklı tutulan bir hakka dayanarak taraflardan biri usulüne uygun bir bildirimde bulunmak suretiyle belirlemişse, bu günün geçmesiyle; haksız fiilde fiilin işlendiği, sebepsiz zenginleşmede ise zenginleşmenin gerçekleştiği tarihte borçlu temerrüde düşmüş olur. Ancak sebepsiz zenginleşenin iyiniyetli olduğu hâllerde temerrüt için bildirim şarttır.
English summary (non-binding):
The debtor of a matured obligation falls into default upon notice from the creditor. Where the date of performance has been fixed jointly, or fixed by one party under a reserved contractual right by due notice, default arises on the lapse of that date. In tort the default arises on commission of the act; in unjust enrichment, on the enrichment — though for a good-faith enrichee, notice is required.
Source: mevzuat.gov.tr · last reviewed: 2026-05-12
- TBK m.123Granting an additional period
Original (Turkish, official):
MADDE 123- Karşılıklı borç yükleyen sözleşmelerde, taraflardan biri temerrüde düştüğü takdirde diğeri, borcun ifa edilmesi için uygun bir süre verebilir veya uygun bir süre verilmesini hâkimden isteyebilir.
English summary (non-binding):
In synallagmatic contracts, if one party falls into default, the other may grant a reasonable additional period for performance or request the judge to grant such period.
Source: mevzuat.gov.tr · last reviewed: 2026-05-12
- TBK m.124Cases where no additional period is required
Original (Turkish, official):
MADDE 124- Aşağıdaki durumlarda süre verilmesine gerek yoktur: 1. Borçlunun içinde bulunduğu durumdan veya tutumundan süre verilmesinin etkisiz olacağı anlaşılıyorsa. 2. Borçlunun temerrüdü sonucunda borcun ifası alacaklı için yararsız kalmışsa. 3. Borcun ifasının, belirli bir zamanda veya belirli bir süre içinde gerçekleşmemesi üzerine, ifanın artık kabul edilmeyeceği sözleşmeden anlaşılıyorsa.
English summary (non-binding):
No additional period is required where: 1) it appears from the debtor's circumstances or conduct that granting one would be ineffective; 2) by reason of the debtor's default, performance has become useless to the creditor; 3) the contract shows that, performance not having been rendered at the specified time or within the specified period, it will no longer be accepted.
Source: mevzuat.gov.tr · last reviewed: 2026-05-12
- TBK m.125Creditor's elective rights (performance/positive/negative damages)
Original (Turkish, official):
MADDE 125- Temerrüde düşen borçlu, verilen süre içinde, borcunu ifa etmemişse veya süre verilmesini gerektirmeyen bir durum söz konusu ise alacaklı, her zaman borcun ifasını ve gecikme sebebiyle tazminat isteme hakkına sahiptir. Alacaklı, ayrıca borcun ifasından ve gecikme tazminatı isteme hakkından vazgeçtiğini hemen bildirerek, borcun ifa edilmemesinden doğan zararın giderilmesini isteyebilir veya sözleşmeden dönebilir. Sözleşmeden dönme hâlinde taraflar, karşılıklı olarak ifa yükümlülüğünden kurtulurlar ve daha önce ifa ettikleri edimleri geri isteyebilirler. Bu durumda borçlu, temerrüde düşmekte kusuru olmadığını ispat edemezse alacaklı, sözleşmenin hükümsüz kalması sebebiyle uğradığı zararın giderilmesini de isteyebilir.
English summary (non-binding):
Where the defaulting debtor has not performed within the additional period (or where no additional period is required), the creditor may at any time demand performance and damages for delay. The creditor may also, by promptly declaring renunciation of performance and delay damages, demand damages for non-performance or rescind the contract. Upon rescission, the parties are mutually released from the duty to perform and may demand restitution of what they have already rendered. Unless the debtor proves absence of fault in falling into default, the creditor may also claim damages for the invalidation of the contract.
Source: mevzuat.gov.tr · last reviewed: 2026-05-12
- TBK m.126Termination in continuous-performance contracts
Original (Turkish, official):
MADDE 126- İfasına başlanmış sürekli edimli sözleşmelerde, borçlunun temerrüdü hâlinde alacaklı, ifa ve gecikme tazminatı isteyebileceği gibi, sözleşmeyi feshederek, sözleşmenin süresinden önce sona ermesi yüzünden uğradığı zararın giderilmesini de isteyebilir.
English summary (non-binding):
In continuous-performance contracts on which performance has begun, where the debtor falls into default the creditor may demand performance and delay damages, or terminate the contract and claim damages for the premature end of the contract.
Source: mevzuat.gov.tr · last reviewed: 2026-05-12
- TBK m.77Unjust enrichment — restitution
Original (Turkish, official):
MADDE 77- Haklı bir sebep olmaksızın, bir başkasının malvarlığından veya emeğinden zenginleşen, bu zenginleşmeyi geri vermekle yükümlüdür. Bu yükümlülük, özellikle zenginleşmenin geçerli olmayan veya gerçekleşmemiş ya da sona ermiş bir sebebe dayanması durumunda doğmuş olur.
English summary (non-binding):
A person who is enriched without justification at the expense of another's assets or labour must restore the enrichment. The duty arises in particular where the enrichment rests on an invalid, unrealised or terminated cause.
Source: mevzuat.gov.tr · last reviewed: 2026-05-12
The statutory provisions are reproduced for information purposes only. The current and official text on mevzuat.gov.tr is authoritative.
Conclusion
Whether to choose rescission or termination depends on the nature of the contract (instantaneous or continuous performance) and the type of damages sought. The wrong choice narrows the scope of recoverable damages or may lead to rejection of the claim.
This article is for information purposes only and does not constitute legal advice. If you would like professional assistance on a specific matter, you may request a consultation.
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