Turkey Invalidates Use Of Unilateral Terms And Conditions

Recent development

The Turkish Court of Appeals has taken a hard line against standard terms and conditions presented as part of a "take-it-or-leave-it" contract. In February 2013, the court held that standard terms and conditions which have not been prepared for a single, specific transaction will be deemed "nonexistent."

In the case, a bank and its customer executed a general loan agreement; the third party defendant mortgaged its property to secure the customer's repayment obligation. The bank included a general transaction term in the mortgage providing that the mortgagor was also a joint guarantor of the amounts due under the loan agreement. The Court of Appeals declared this clause invalid, "nonexistent" to use the court's term, as it did not conform to the nature of the mortgage transaction.