Guarantee Commitment under Commercial Sales Contract under Turkish Law: Can the Importer be Held Responsible for Defective Products?
One of the most complex problems faced by the parties in a commercial transaction is the delivery of defective goods. Although the results of defective performance in most contracts are arranged in detail; some contracts do not include provisions for resolving disputes arising from defective delivery, or existing provisions are not sufficient to resolve the dispute. One of the most incomprehensible problems in commercial sales is the importer’s responsibility for defective products. Even if the importer is not the manufacturer of the products, it has a responsibility to the counter party of the sales contract concerning defective goods under Turkish Law[1].
The seller is liable for the defective goods that have a failure to meet the qualities or specifications warranted by the seller under the sales contract or that have material, economic or legal insufficiencies[2] which affect the quality and quantity of the product[3]. Under Turkish Law, it is regulated that the merchant, who claims the goods delivered are defective, must serve a notice[4] to the seller in order to use his/her elective rights[5].
As per article 23 / 1-c[6] of Turkish Commercial Code No. 6102 (“TCC”), in case there is a defect found in the goods concerning commercial sales, the defect notice shall be made in a notice period depending on the type of the defect: the buyer has an obligation to report the defective goods to the seller within two days in the case of “obvious defects”[7] and within eight days in case of “ordinary defects”[8]. As for “hidden defects” [9], the buyer shall report the situation to the seller immediately. Failure to report any defects within the legal period results the loss of buyer’s right to apply for the elective rights arising from the Law[10].
Can the Buyer Benefit from a Guarantee Commitment?
Sometimes, in commercial sales, the seller may offer a warranty document for the product in order to attract the buyer to the sign the contract by providing him with some additional rights. This document, which is called a warranty certificate[11] in consumer sales, is regarded as a guarantee agreement between merchants[12].
The statute of limitation regarding the defective products is set at 2 years under general provisions[13].It should be noted that a period of limitation prescribed by the manufacturer over the statutory period indicates that the period has been extended, meaning that the rights of the buyer risen from the defective products will continue until the end of the period specified in the concerned warranty agreement. And this period will also bind the importer against the buyer if it has been committed by manufacturer to the importer[14].
The aim of the warranty commitment is to provide additional rights to the buyer or to extend the rights provided in sales contract. With such commitment, the buyer may make requests regarding the products without complying with the legal requirements of defective product responsibility of the seller[15]. However, in case the seller has made a commitment which complements the responsibility for the defect, elective rights within the meaning of Turkish Code of Obligations No.6098 (“TCO”) article 227 shall also be applicable by fulfilling the legal requirements regarding the defective goods responsibility.
Is it Possible to Relieve from the Liability?
Finally, since the defective goods provisions in the TCO are not mandatory rules of law, the parties will be able to make agreements that eliminate or restrict such regulations if they wish. For such non-liability clause to be binding between parties, the seller should acknowledge that the defects found are unknown to him/her before the delivery[16].But if the seller has fraudulently disguised the defect from the buyer, any condition that limits or removes the responsibility of the importer regarding the defect will be deemed invalid[17].
Author: Deniz Çelikkaya
[1]Court of Cassation 19th Circuit, E. 2014/680, K.2013/18422 dated January 7, 2014: The court ruled that the defect risen from the manufacture process. And both the manufacturer and the seller is responsible for such defect.
[2] Ünlütepe Mustafa, “Taşınır Satış Sözleşmesinde Satıcının Ayıptan Sorumluluğu Bakımından Gözden Geçirme ve Bildirim Külfetinin Yerine Getirilmesinin Tabi Olduğu Süreler”, Marmara Üniversitesi Hukuk Fakültesi Hukuk Araştırmaları Dergisi 24/1, Istanbul 2018, https://dergipark.org.tr/tr/download/article-file/509559, fn.2, p.297.
[3]Article 219 of Turkish Code of Obligations(“TCO”),; Kocar Serra, “Ticari Satış Sözleşmesi ve Ticari Satışta Ayıp Sorumluluğu”, LLM Thesis, Marmara University, İstanbul 2018, p.55.
[4]The notification must be made in order for the buyer to exercise its elective rights arising from the defect.
[5]As per article 227 of TCO elective rights can be defined as follows: i) returning from the contract by giving the products back to the seller, ii) requesting a discount from the contract price at the rate of defect, iii) requesting the free repair of the product, iv) replacement of the product if possible.
[6] Article 23/1-c of TCC: “If it is expressly clear that the good at issue is defective on delivery, the buyer must notify the seller within two days. If it is not expressly clear, the buyer is obliged to investigate or have it investigated, and notify the defect to the seller in order to protect its rights within eight days upon delivery of the goods. In other cases, the second paragraph of article 223 of Turkish Code of Obligations applies.”
[7]Court of Cassation 19th Circuit, E. 2016/12132, K. 2017/1449, dated February 23, 2017:The obvious defects are defects that do not have to be examined during the delivery of the seller since the defect can be seen without examination.
[8]Court of Cassation 19th Circuit, E. 2016/5159, K. 2017/915, dated February 8, 2017: Ordinary defects are defects that can be seen with ordinary examination, which are not obvious during the delivery of the seller.
[9]Court of Cassation 19th Circuit, E. 2015/16380, K. 2016/9129, dated May 23, 2016: The hidden defect is the defect that cannot be revealed by a regular examination.
[10]In practice, it is often observed that the local courts have not examined whether or not the obligation to notice is fulfilled in terms of commercial sales. However, it is stated that it is necessary to investigate whether or not the obligation to report the defect is fulfilled as it can be understood by the recent jurisprudence of the Court of Cassation. For this reason, it would be beneficial go through the appeal path if there is no examination of the failure to notice the defect. ; Court of Cassation Assembly of Civil Circuits E. 2014/19-861, K. 2016/632 dated May 25, 2016; Court of Cassation 19th Circuit, E.2016/1974, K. 2016/15653 dated December 12,2016.
[11]The Warranty Certificate is a document that the manufacturers or importers undertake to replace, repair, refund, or reimburse the goods they sell, produce or import free of charge due to the malfunctions that may occur within the warranty period of at least 2 years.
[12] Court of Cassation Assembly of Civil Circuits, E. 2011/505, K.2011/636, dated October 19, 2011.
[13]According to article 231 of TCO there is two year-statute of limitation period in every lawsuit that the buyer of defective goods may file, even if the defect occurs afterwards. The statute of limitation starts right after the delivery of goods. The two year-statute of limitation is also the period recognized for the buyer to give notice of defect and exercise his elective rights. The one and only exception for this statute of limitation is when the seller is in gross negligence. In these circumstances, ten year statute of limitation applies as per article 125 of the TCO. ; Court of Cassation Assembly of Civil Circuits, E. 2011/505, K.2011/636, dated October 19, 2011.
[14] Court of Cassation Assembly of Civil Circuits, E.2011/505, K.2011/636, dated October 19, 2011; Court of Cassation 19th Circuit, E. 2006/3358, K.2006/8948 dated September 28, 2006.
[15] Court of Cassation Assembly of Civil Circuits, E.2013/1696, K.2015/1109 dated March 27, 2015: The conditions of holding the importer responsible for the defect in the goods; presence of a deficiency deemed as a defect, significant deficiency in the gods, and the defect is present at the time the benefit and loss of the good passes to the buyer, the buyer purchasing the goods without knowing the existence of the deficiency.
[16] Court of Cassation Assembly of Civil Circuits, E.2013/1696, K.2015/1109 dated March 27,2015.
[17] TCO article 115: “A previously made agreement to the effect that the debtor shall not be responsible for gross negligence shall be strictly null and void.”; TCO article 221.