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DEFECTIVE GOODS IN COMMERCIAL SALES BETWEEN MERCHANTS

The liability of the seller for defective goods (in Turkish “ayıplı mal”) is governed generally by the Turkish Code of Obligations numbered 6098 and dated 4 February 2011 (hereinafter referred to as the “TCO”, in Turkish “Türk Borçlar Kanunu”) between the articles 219 and 231.

On the other hand, the Turkish Commercial Code numbered 6102 and dated 14 February 2011 (hereinafter referred to as the “TCC”, in  Turkish “Türk  Ticaret Kanunu”) provides some special provisions concerning the liability of the seller in commercial sales between merchants in its article 23.

Except for the issues specifically provided in article 23 of the TCC, the general provisions in the TCO are applied to the commercial sales between the merchants as well.

1. Liability from Defective Goods

As per the article 219 /1 of the TCO, “the seller is liable for the defective goods that have a failure to meet the qualities or specifications warranted by the seller under the sale contract or that have material, legal or economic insufficiencies which affect the quality and quantity or which are contrary to the quality agreed or which significantly reduce or abolish the value of the goods in terms of purpose of use and expected benefit”.

2. Types of Defect

The types of defect can be grouped under three main titles:

  • Material Defect (in Turkish “Maddi Ayıp”) : Any material deficiency in the product, such as a product with a broken glass or a torn dress;
  • Legal Defect (in Turkish “Hukuki Ayıp”): There is not any material deficiency in the product. However, the use of the product is precluded partly or fully due to legal reasons, such as a cloned cellular phone.
  • Economical Defect (in Turkish “Ekonomik Ayıp”): Any defect that reduces the expected benefit and economical value of the product. For example, when a product does not have the specialties defined in the instructions for use, this will be considered as an economical defect.

The defects can also be grouped as follows:

  • Clear Defect (in Turkish, “Açık Ayıp”): The defects that can easily be observed by naked eye and with a simple inspection such as a stained product.
  • Hidden Defect (in Turkish, “Gizli Ayıp”): The defect that cannot be determined through a simple inspection, but that reveals itself after use, such as the electronic components of a machine that are out of order.

3. The Conditions Required to Keep the Seller Liable for the Defective Goods

In order to keep the seller liable for any defect as per the relevant articles of the TCO, the below mentioned conditions shall be met.

  • Existence of a defective product;
  • A substantial defect: The alleged defect shall substantially reduce or abolish the value of the product or its purpose of use;
  • The buyer shall not be aware of the defect at the time of purchasing. Also the seller shall not be held liable for the defects that could easily be recognized with an ordinary examination unless the seller specifically undertakes that there is not such a defect in the product (this is applied only for the situations that the buyer has an opportunity to examine the product before purchasing) ;
  • There should not be any contract limiting or abolishing the liability arising from defective products. However, if the seller has a gross negligence, the contracts limiting or abolishing the liability shall be invalid.
  • The buyer should not have already accepted the defect. The buyer is obliged to inform the seller clearly and duly about the defects after the time of delivery for movable properties and after the registry for immovable properties. If the buyer does not advise the seller properly within the time periods granted by law, it is considered that the buyer has accepted the defects implicitly.
  • In order to benefit from the rights provided to the buyer by law for defective goods, the buyer shall fulfil its obligations arising from law duly (i.e. to act in conformity with inspection and notice periods).

4. Buyers’ Obligations Under the TCC For Commercial Sales Between Merchants

As per article 23 of the TCC, in the commercial sales between merchants, the buyer merchant has the obligation of examination and notice in order to protect its rights arising from defective goods.

Article 23/1 provides that “if the defect of the goods is clear at the time of delivery, the buyer shall notify the seller of the defect within two days. However, if there is a hidden defect, the buyer is obliged to examine the goods or have them examined by third parties within eight days and upon this examination, if it is determined that the goods are defective, the buyer shall advise the seller of the defect within the same period (eight days after delivery) in order to protect the rights granted to the buyer.

If the buyer merchant fails to fulfill its examination and notice obligations duly and on time, then he shall be considered as to have accepted the subject goods with the alleged defect.

However, if the seller has a gross negligence in selling defective goods, the seller shall not refrain from liability (even partly) alleging that the buyer has not notified the defect within the periods provided by law.

Unless otherwise undertaken by the seller, all the lawsuits arising from the liability of the seller for defective goods shall be subject to two-year time bar as of the delivery /transfer of the sold goods to the buyer. However, if the seller has a gross negligence in delivering /transferring defective goods, two -year time bar shall not be applied.

5. Buyers’ Rights

In case of buying defective goods, the buyer has the right of exercising any of the following rights against the seller provided to the buyer by law:

    • Recission of the contract notifying that the buyer is ready to give back the sold goods;
    • To keep the sold goods and demand a discount in the sale price proportional to defect;
    • If an excessive repair expense is not in question, to request free repair of the sold goods;
    • To request exchanging the defective product with a sound one, if it is possible to exchange the same with a similar one.

Moreover, the buyer’s right to claim compensation for the damages and losses sustained according to the general terms is reserved.

The seller may prevent the buyer from exercising one of the above optional rights by immediately exchanging the defective product with a sound one and compensating all the damages and losses of the buyer.

If the buyer prefers to exercise the right of recission, the court may evaluate the case and may decide for repair of the goods or discount in sales price instead of recission, if it concludes that exercising the right of recission is unfair.

If the loss of value arising from the defect is very close to the sale price, then the buyer may only exercise the right of recission or the right of exchanging the defective product with a sound one.

According to article 18/3 of the TCC, the notifications between the merchants for putting the other party into default, or terminating the contract or recission shall be made through notary public or registered letter or telegraph or secure electronic signature.

Our Firm remains at your disposal for any further clarifications you may require.

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