Limitations and exclusions of liability in business to business contracts in Türkiye

Under Turkish law, contractual limitations and exclusions of liability between commercial parties are principally governed by the Turkish Code of Obligations (“TCO”). Article 26 recognises freedom of contract, while Article 27 invalidates agreements that contravene mandatory rules, public policy or good morals. Moreover, Article 115 renders ineffective any exclusions or limitations of liability for wilful misconduct or gross negligence agreed in advance. Courts construe and police such clauses through the good‑faith principle enshrined in Article 2 of the Turkish Civil Code (“TCC”) and the standard‑terms rules under Articles 20–25 of the TCO, which address transparency and unexpected terms even in B2B settings. The TCO governs merchant status and certain commercial contracts but does not displace the TCO’s liability architecture. Additionally, Article 116 of the TCO addresses vicarious liability for auxiliaries, and parties may contractually exclude liability for the acts of auxiliaries in whole or in part by a prior agreement. If a service, profession, or craft requiring specialised expertise may be performed only with a licence granted by law or by the competent authorities, any agreement stating that the obligor shall not be liable for the acts of auxiliaries will be void. Case law supplements these statutory rules, but analysis remains statute‑centred.

Yes. Any clause that purports, in advance, to exclude or limit liability for wilful misconduct (kasıt) or gross negligence (ağır ihmal) is ineffective under Article 115 of the TCO. Similarly, under Article 116, while parties may exclude liability for the fault of auxiliaries (yardımcı kişiler), such exclusion cannot cover the auxiliaries’ wilful misconduct or gross negligence.

Turkish law also affords heightened protection to life and bodily integrity. Moreover, clauses seeking to avoid liability for death or personal injury are scrutinised against mandatory norms, public policy and good morals and should be assumed unenforceable in practice. 

Fraud cannot be neutralised by contract and any attempt to do so would offend public policy and good morals. Statutory obligations that the law characterises as non‑derogable cannot be contracted out of. 

For sale of goods, the seller’s liability for defects and warranty‑linked remedies is governed by the TCO, and while merchants may agree certain adjustments within the statute’s limits, deliberate concealment of defects engages mandatory liability that cannot be excluded.

Turkish legislation does not recognise consequential or indirect loss as discrete statutory categories. Damages in contract focus on actual loss and loss of profit, assessed case‑by‑case. Within this framework, B2B parties commonly and validly exclude or limit recovery for indirect or consequential loss, provided the clause preserves liability for wilful misconduct and gross negligence as required by Article 115 and does not produce a result contrary to public policy or good morals.

Courts will interpret exclusions narrowly if phrased ambiguously, especially where they appear in standard terms and conditions that were not specifically brought to the counterparty’s attention. The risk of dispute can be reduced by drafting a clear definition of the excluded categories that aligns with the contract’s remedial scheme and by coupling the exclusion with an express, prominent carve‑out for wilful misconduct and gross negligence.

Loss of profit is a recognised head of loss under Turkish contract law and, in B2B contracts, parties may in principle exclude or limit liability for loss of profit, revenue, data, goodwill or anticipated savings. Such exclusions must not be drafted contrary to Article 115 of the TCO and must withstand scrutiny under public policy, good morals, and the good‑faith principle of the TCC. 

Data loss and goodwill loss are not codified as discrete categories, but depending on proof, they may be pleaded as actual loss or lost profit. Their treatment is therefore left to the parties’ allocation of risk rather than to statutory taxonomy. 

To improve enforceability, exclusions should be precise, prominent where included in standard terms, and integrated with the contract’s indemnities, service credits, and insurance arrangements so that the overall allocation is coherent and not unexpectedly one‑sided.

Financial caps on liability are widely used and generally upheld in Turkish B2B contracts. The usual reference points include a fixed amount, a multiple of fees, or alignment to available insurance. Caps must preserve liability for wilful misconduct and gross negligence under Article 115 of the TCO. A cap that would, in substance, render performance obligations illusory or that would defeat the counterparty’s core contractual interest risks being invalid under Article 27 of the TCO and good‑faith principles. 

Where caps sit within standard terms and conditions, Articles 20–25 of the TCO require that they be drafted transparently and brought to the counterparty’s attention if they would reasonably be seen as unexpected. In practice, clear drafting, a genuine commercial rationale for the cap level, and explicit carve‑outs for the non‑derogable categories secure enforceability, and Turkish courts are generally respectful of negotiated allocations between merchants. In addition, Article 28 of the TCO states that if there is a clear disproportion between the mutual performances in a contract, and if this disproportion arises from taking advantage of the aggrieved party’s distress, lack of judgment, or inexperience, the aggrieved party may, depending on the circumstances, either notify the other party that they are not bound by the contract and demand the return of their performance, or remain bound by the contract and demand that the disproportion between the performances is remedied. The aggrieved party may exercise this right within one year from the date they become aware of their lack of judgment or inexperience; in the case of being in a difficult situation, from the date such situation ceases; and in any event, within five years from the date the contract was entered into.

Exclusive remedy clauses are not specifically regulated but are recognised as a valid exercise of contractual freedom. Parties may agree that a defined remedy constitutes the sole recourse for a given type of breach. 

Turkish courts will not, however, enforce an exclusive remedy that is illusory or fundamentally ineffective, or that would in practice exclude liability for wilful misconduct or gross negligence, which Article 115 of the TCO forbids. 

Where enforcing exclusivity would be contrary to public policy or good morals, courts may permit recourse to general remedies. Drafting should therefore retain an express carve‑out for wilful misconduct and gross negligence and include a safety‑valve that restores ordinary remedies if the specified remedy fails of its essential purpose for reasons not attributable to the claimant.

Turkish law recognises partial invalidity. If part of a clause is void, the invalid part can be severed while preserving the remainder if the valid portion is capable of standing independently and it is reasonable to conclude the parties would have agreed to it on its own. This approach flows from Article 27 of the TCO. Severability is aided by drafting separable provisions rather than embedding multiple effects in a single sentence. Where removal of the offending element would defeat the parties’ shared intention, the whole clause may fall.

In principle, the limitation periods set out in Turkish legislation cannot be modified by agreement between the parties, and this applies to both the extension and the reduction of limitation periods. Article 148 of the TCO provides that the limitation periods stated in that part of the Code are fixed and may not be altered by contract. This reflects the public-policy character of limitation rules under Turkish law. The general ten-year period in Article 146 and the five-year periods in Article 147 are therefore not contractually variable. 

More generally, limitation periods prescribed in other statutes derive from legislation rather than party autonomy and are likewise not open to contractual deviation. Parties may, however, influence when a cause of action accrues or becomes due provided these arrangements do not render the exercise of the right practically impossible or excessively difficult, and provided they withstand scrutiny under the standard-terms rules in Articles 20–25 of the TCO and the good-faith and public-policy controls in Article 27 of the TCO and Article 2 of the TCC. 

A debtor cannot waive the limitation defence in advance; a waiver is only effective once the limitation period has expired. In practice, commercial contracts governed by Turkish law manage risk through notice provisions, claims‑made insurance alignment, and detailed claims procedures, rather than attempting to alter statutory time bars.

Public‑policy and good‑morals controls constrain liability limitations in B2B contracts. Clauses that would neutralise accountability for wilful misconduct or gross negligence are ineffective as a matter of mandatory law. Provisions that would, in effect, deprive a party of any meaningful remedy for breach or that would shock the conscience in context can be set aside under Article 27 and general good‑faith principles. 

Sector‑specific legislation may also impose non‑excludable liability in regulated fields such as financial services, energy or telecommunications. Parties should therefore treat industry regulation as a baseline when configuring limitations. Courts can mitigate disproportionate outcomes through established reduction and contributory‑fault principles when quantifying damages. The practical implication is that commercially balanced caps and exclusions, drafted transparently and with the mandatory carve‑outs preserved, are the safest route to consistent enforcement.

For contracts governed by Turkish law but performed abroad, Turkish mandatory rules, including Article 115 of the TCO, apply irrespective of where performance occurs. 

For contracts governed by foreign law and performed in Turkey, Turkish courts generally apply the chosen law pursuant to Article 24 of the International Private and Procedural Law (Law No. 5718), but overriding mandatory provisions (doğrudan uygulanan kurallar) may still be applied under Article 6 of that law where they protect essential public interests. 

Where the UN Convention on Contracts for the International Sale of Goods (CISG) applies to international sales, its damages regime and mitigation rules govern unless the parties derogate, and any contractual limitation will be read alongside non‑derogable Turkish norms if a Turkish court is seized. Hence, cross‑border contracts should pair a clear governing‑law and jurisdiction clause with a limitations framework that expressly preserves the non‑derogable carve‑outs.