Terminating Agency and Distributorship Contracts: Issues to Consider

As the number of foreign products and services in the Turkish market has increased since the 1980s and 1990s, so has the number of agency and distributorship relationships with foreign companies. The 21^st century, however, is proving to be an era of foreign investor preference for selling their products directly, without using an intermediary or distributor. Consequently, termination of agency and distributorship contracts is becoming more common than their establishment. From a legal perspective, this has generated debate over the formalities to be followed when terminating such contracts, as well as the compensation arising from termination.

While distributorship contracts are not specifically regulated under any article of Turkish law, agency contracts are governed by the Turkish Commercial Code ("TCC"). By way of analogy, Turkish lawyers and the judiciary have been applying the TCC provisions related to agency in resolving disputes arising from distributorship