COMMERCIAL LITIGATION AND COMPANY LAW DISPUTES

COMMERCIAL LITIGATION AND COMPANY LAW DISPUTES

Company Law, Breach of Contract, Shareholder Disputes, and Commercial Receivables Actions

Introduction

Commercial lawsuits are private-law disputes arising from the commercial activities of commercial enterprises and merchants and governed by Turkish Commercial Code No. 6102. Annulment of shareholders’ or general assembly resolutions, collection of commercial receivables, unfair competition actions, and compensation claims arising from breach of commercial contracts are among the principal subjects of this field.

Company Law and Disputes Between Shareholders

One of the most important dimensions of commercial litigation is disputes between shareholders in limited liability and joint-stock companies. Actions for annulment of general assembly resolutions, protection of minority rights, withdrawal or expulsion from a company for just cause, and liability actions against members of the board of directors fall within this scope. Lawful operation of corporate bodies, prevention of procedural errors in decision-making, and protection of shareholders’ rights are decisive in resolving commercial disputes.

Breach of Commercial Contracts and Compensation Claims

Serious disputes may arise from breaches of dealership, distributorship, franchise, supply, and subcontracting agreements. Such disputes may involve compensation for positive and negative damages caused by breach, contractual-penalty claims, procedures for termination of the contract, and collection of commercial receivables.

The Importance of Legal Assessment and Advisory Services

Commercial litigation is governed by highly technical legislation and specialized Court of Cassation practice. Procedural matters such as filing deadlines, preservation and determination of evidence, and examination of commercial books can directly determine the outcome. Our law office provides comprehensive legal support from pre-litigation mediation through court proceedings and management of arbitration processes.

REAL-ESTATE LITIGATION AND, IN PARTICULAR, ACTIONS ARISING FROM BREACH OF A PROMISE-TO-SELL IMMOVABLE PROPERTY AGREEMENT

Legal Assessment Regarding Formal Validity, Specific Performance, Cancellation and Registration of Title, Rescission, Compensation, and Refund of the Price

Introduction

Real-estate disputes are among the most common private-law disputes in practice. They are not limited to actions for cancellation and registration of title. They also include actions for performance under promises to sell, refund of the purchase price, compensation, loss of rent caused by delay, receivables based on rescission, unjust enrichment, disputes concerning annotations in the land register, and, in some cases, claims based on tort or pre-contractual reliance liability.

Especially in promises to sell immovable property, whether the agreement was formally drawn up by a notary directly changes the nature of the action and the claims that may be asserted. A promise-to-sell agreement is a preliminary contract under which the parties undertake to execute the official sale before the land registry in the future. It does not itself transfer ownership, but, when its conditions are met, gives the promisee the right to demand transfer of title from the promisor. For this result to arise, the agreement must comply with the official form required by law. Article 237 of Turkish Code of Obligations No. 6098 expressly provides that promises to sell, repurchase agreements, and purchase-option agreements concerning immovable property are invalid unless executed in official form.

Real-estate litigation is not confined to disputes over sale or promises to sell. Common actions include cancellation and registration of title, dissolution of co-ownership, prevention of interference, compensation for unlawful occupation (ecrimisil), expropriation and de facto expropriation, eviction and receivables arising from leases, and various compensation actions concerning ownership or use of immovable property.

Nevertheless, a substantial portion of the most complex and technical disputes arises from promises to sell. Validity, compliance with formal requirements, annotation in the land register, default of the promisor, and transfer to third parties directly determine the available causes of action and remedies. Such agreements therefore constitute one of the most critical and demanding areas of real-estate law.

I. Legal Nature of a Promise-to-Sell Immovable Property Agreement

A promise to sell immovable property is a preliminary contract creating an obligation to conclude a sale contract in the future. The promisor undertakes to transfer the property in the land register when specified conditions occur or on an agreed date, while the promisee generally undertakes to pay the agreed price. It does not directly transfer ownership. If validly executed, however, it may support a claim for specific performance and a corresponding action for cancellation and registration of title.

Its practical importance is especially visible in off-plan sales, project development, jointly owned properties, projects in which construction servitude or condominium ownership is expected, and relationships in which the parties have bound themselves to a sale although title has not yet been transferred. The subject matter must be clear, determinable, and legally transferable, and the promisor must be the owner or otherwise authorized to transfer. Otherwise, serious problems arise at the performance and registration stage. The subject, scope, and disposal authority of the promisor are therefore as important as the form.

Relevant Court of Cassation Case Law: According to settled case law, a promise to sell is a preliminary contract that does not transfer ownership directly. If validly established, it allows the promisee, once the conditions are met, to demand transfer of title and to obtain that transfer through litigation.

II. Formal Requirement: Why Is It Vital?

In sales and promises to sell concerning registered immovables, the form requirement is a condition of validity deriving from public order. Article 706 of Turkish Civil Code No. 4721 requires official form for agreements intended to transfer ownership of immovable property. Article 237 of Turkish Code of Obligations No. 6098 expressly states that a promise to sell immovable property is invalid unless executed officially. When read together with Article 26 of Land Registry Law No. 2644 and the provisions of Notary Law No. 1512, a promise-to-sell agreement must be drawn up by a notary as an official deed. Mere signature certification or a privately written instrument is generally insufficient.

Violation of the formal requirement has severe consequences. As a rule, an invalid agreement cannot support cancellation and registration of title, and most traditional performance-based remedies for breach are also unavailable. Even where the parties’ intentions coincide, the promise is invalid unless the statutory form is observed. Documents frequently used in the market—private agreements, deposit protocols, handwritten sale documents, preliminary reservation forms, or external-sale instruments—often do not enable a party to compel transfer of title because they fail to satisfy the required form. The defect is therefore not merely technical; it is a fundamental legal problem causing direct loss of rights.

Relevant Court of Cassation Case Law: Settled practice treats execution by a notary in the form of an official deed as a validity requirement. Private written agreements made without this form generally produce no effect, and actions for cancellation and registration of title based on them are dismissed.

III. Actions Available upon Breach of a Notarized Promise-to-Sell Agreement

Where a promise-to-sell agreement has been validly executed before a notary and is breached, potential actions fall into several groups: cancellation and registration of title together with specific performance; compensation and rescission based on the alternative rights under Article 125; compensation for loss of rent caused by delayed delivery; protection against third parties where the agreement is annotated; and, depending on the case, contractual-penalty and receivables actions. The available remedy depends on validity, whether the promisor is in default, whether delivery or registration remains possible, and any special contractual terms.

The first decisive distinction is this: if the promisor can still transfer title and the agreement is valid, the promisee will generally seek specific performance and cancellation and registration of title. If the property has been transferred to a third party, specific performance has become objectively impossible, or the promisee no longer wants the transfer, the alternative rights under Article 125, rescission, and compensation become central. In projects with a clearly agreed delivery and registration date, loss of rent and similar damage caused by delay may also be claimed.

IV. Alternative Rights under Article 125 of the Turkish Code of Obligations

Article 125 grants the creditor three alternatives when the debtor defaults under a reciprocal contract. If the debtor does not perform within an appropriate additional period, or if no additional period is required, the creditor may always demand specific performance together with compensation for delay. Alternatively, by immediately declaring that performance is waived, the creditor may claim positive expectation damages, or may rescind the contract. The law clearly defines these three routes.

In a promise-to-sell context, these rights operate as follows. If the buyer grants the seller an appropriate period and title is still not transferred, the buyer may first demand transfer and compensation for delay. Second, the buyer may declare that transfer is no longer sought and claim positive damages in lieu of performance. Third, the buyer may rescind, recover what was paid, and claim negative reliance damages associated with rescission. The choice is strategic because it directly affects the scope of the action, the relief requested, and the burden of proof.

The alternative rights depend on default. The time for registration or delivery must therefore have arrived, and an appropriate additional period must have been granted unless circumstances make it unnecessary. If the promisor transfers the property to a third party and thereby makes performance impossible, an additional period will often be pointless. Registration then becomes impossible, and compensation or rescission comes to the forefront.

Relevant Court of Cassation Case Law: Transfer of the property to another person or creation of a real right over it may constitute default that makes specific performance impossible and renders an additional period unnecessary. In such circumstances, the creditor may directly seek compensation or rescission.

V. Delay in Delivery and Monthly Loss-of-Rent Compensation

Promise-to-sell contracts used by construction companies, contractors, and project developers often state a specific delivery date. If the promised unit is not delivered on time, the buyer may claim monthly loss of rent, arguing either that the buyer had to rent elsewhere or that the property would have generated rental income. Legally, this may constitute delay damages, lost profit, or deprivation of use. The result is not automatic. The contractual delivery date, length of delay, reality of the loss, and adequate causal link between delay and loss must be proven.

Courts generally examine actual damage. They may consider whether the buyer truly had to pay rent elsewhere, whether the property was fit and available for rental, comparable rental values, the stage of the project at which the delay occurred, and whether the obstacle arose from the seller or from objective causes. A bare statement that “I lost rent every month” is insufficient; lease contracts, bank records, comparable-rent research, and expert reports may be required.

If the contract expressly fixes a monthly amount for delay, the buyer’s position is stronger. Yet the validity of the main agreement remains decisive. A delay-compensation or penalty clause in a valid notarized agreement does not have the same effect as a similar clause in an invalid private instrument. Formal validity is therefore important not only for registration but also for damages.

Relevant Court of Cassation Case Law: Loss-of-rent compensation for delayed delivery must be calculated through concrete evidence, comparable-rent research, and expert examination; the buyer bears the burden of proving actual damage.

VI. Rescission of the Contract

If the seller fails to perform on time and the buyer no longer wishes to continue, the right of rescission under Article 125 arises. Upon rescission, the parties are released from reciprocal performance obligations and may recover what they have already rendered. The buyer may seek return of the purchase price, deposit, installments, and certain contract-related payments. Rescission differs from specific performance: the buyer no longer seeks title but retroactive unwinding of the contractual relationship.

The recoverable loss must be carefully characterized. In doctrine and practice, negative or reliance loss is generally central: the party seeks the financial position that would have existed had the contract never been relied upon. Transaction costs, wasted expenditures, return of the price, interest, and amounts calculated under the principle of equalizing justice may be included depending on the case. Each item must be tied to the correct legal basis; otherwise it may be dismissed for mischaracterization.

VII. Action for Cancellation and Registration of Title

The most critical action arising from a promise to sell is cancellation and registration of title. It seeks transfer of ownership to the claimant based on a valid promise-to-sell agreement. If granted, the judgment substitutes for the conveyance and ownership is registered by court order. The agreement must first be valid; the property must be identified or identifiable; the defendant must own it or be authorized to transfer it; and specific performance must remain legally possible.

Annotation of the agreement in the land register provides a major advantage. Under Article 1009 of the Civil Code and Article 26 of the Land Registry Law, annotation strengthens the personal right and makes it enforceable, to a certain extent, against third parties. The annotation generally has a five-year effect under Article 26; after that, it loses legal force. If there is no annotation and the property is transferred to a good-faith third party, the registration claim is seriously weakened. If there is an annotation, the right against a subsequent owner is substantially stronger.

If transfer to a third party makes specific performance impossible, claims for money, compensation, rescission, refund, or unjust enrichment become central rather than registration. The land-registry status and the position of third parties must therefore be checked before filing.

Relevant Court of Cassation Case Law: Settled decisions of the former 14th Civil Chamber require a valid agreement, ownership or transfer authority of the promisor, a determined property, and legal possibility of performance. If the property has been transferred, the good faith of the transferee and whether the agreement was annotated are decisive.

VIII. Defect of Form and Resulting Loss of Rights

Failure to execute the agreement as a notarial deed generally results in absolute nullity. The parties cannot assert specific performance, registration, or many breach-based claims as though a valid promise existed. This is the greatest loss: even if a person believes the property was actually purchased, a private document generally does not support a registration action. This is one of the most serious causes of victimization in practice.

A formal defect may also render certain ancillary clauses ineffective. Contractual penalties tied to an invalid principal agreement, or certain performance items claimed solely on a breach theory, become disputable. It is not enough to say that an item “is written in the contract.” Courts first ask whether the principal agreement is formally valid. If it is invalid, claims generally shift to unjust enrichment and equalizing justice.

IX. Claims Available under a Private Written Agreement

Although a privately written promise to sell or external-sale agreement is generally invalid, this does not mean that no claim may be made. The most typical is refund of the amount paid. Court of Cassation decisions recognize recovery from the seller under unjust-enrichment principles. Settled case law further states that the calculation should not be limited to the nominal amount but should reflect purchasing power when performance became impossible, under the principle of equalizing justice.

Depending on the facts, necessary and beneficial expenses, restitution under unjust enrichment, and items arising from occupation, use, construction, or improvements may also be claimed. None is awarded automatically. The claimant must prove who was enriched, to what extent, and what increase occurred in the other party’s assets. A private agreement generally closes the door to registration and specific performance but may provide a starting point for refund and related monetary claims.

Common claims include return of the sale price, deposit or down payment, unjust-enrichment receivables, reimbursement of necessary and useful expenses, the value increase created by improvements, and interest where appropriate.

Court of Cassation practice applies equalizing justice to return not merely the nominal price but its updated value according to purchasing power. Inflation, depreciation of money, and the economic circumstances of the parties are considered.

Relevant Court of Cassation Case Law: The Grand General Assembly for Unification of Judgments, in its decision dated 30 September 1988, No. 1987/2 E., 1988/2 K., held that recovery of a price paid under an invalid immovable sale should reflect changes in purchasing power under equalizing justice, rather than nominal value alone.

As a rule, a private agreement cannot support cancellation and registration of title or specific performance. The litigation strategy is therefore usually based not on contractual breach but on unjust enrichment and equalizing justice.

X. Comparison of a Private Promise to Sell and a Notarized Promise to Sell

The greatest difference is the range of remedies. Under a valid notarized promise, the buyer may, where conditions are met, seek cancellation and registration of title, specific performance, delay damages, loss of rent, rescission, and certain ancillary remedies. Under a private agreement, registration and specific performance are generally unavailable; the focus shifts to refund, unjust enrichment, equalizing justice, and limited monetary claims.

The second difference is annotation. A notarized promise may be annotated in the land register, strengthening the right and its enforceability against third parties. A private agreement cannot be so annotated. If the property is transferred to a third party, the promisee under a notarized and annotated agreement may still have remedies in certain circumstances, whereas the claimant’s position under a private agreement is much weaker.

The third difference concerns proof and legal characterization. Under a notarial agreement, the claimant says: “I have a valid contract that was not performed.” Under a private agreement, the claimant often must say: “I paid money within an invalid relationship, and the other party was unjustly enriched.” This difference is highly important for interest, limitation periods, damages calculations, and the type of action.

At litigation stage, the distinction is pronounced. A claimant under a valid notarized agreement has a broad range of claims, including registration, specific performance, delay damages, loss of rent, contractual penalties, and rescission where appropriate. Most of these are unavailable under private agreements, where actions are generally confined to refund, unjust enrichment, equalizing justice, and limited compensation items. Form is therefore not merely a validity issue; it directly determines litigation strategy and available results.

A common mistake is to seek cancellation and registration of title on the basis of a private agreement. Such claims are generally dismissed and may cause serious loss of rights.

XI. When Can a Private Agreement Be Treated “as If Official”?

The principal rule is that a private promise to sell is not treated as an officially executed contract. However, Court of Cassation case law recognizes that in very exceptional circumstances invoking the formal defect may constitute abuse of rights under Article 2 of the Civil Code. This issue may arise where one party has fully, or to an undeniably substantial extent, performed, while the other seeks to rely solely on lack of form to create grave injustice. The Unification of Judgments Decision of 30 September 1988 is a key reference recognizing the exceptional role of Article 2 when the form requirement conflicts with the prohibition of abuse of rights.

This is highly exceptional and must not be read to mean that private agreements are often valid. The exception is narrowly construed. A private agreement produces effects similar to an official one only in a narrow category of cases involving manifest injustice and abuse of rights. The safe route is always to execute a notarial deed and, where possible, annotate it in the land register. Relying on the exception is extremely risky.

Relevant Court of Cassation Case Law: The Grand General Assembly for Unification of Judgments held on 30 September 1988, No. 1987/2 E., 1988/2 K., that non-compliance with form generally invalidates an immovable sale, but where one party has fully performed and the other relies solely on the formal defect to cause grave inequity, the objection of invalid form may be rejected under Article 2 of the Civil Code.

Conclusion

Real-estate disputes, especially those arising from promises to sell, must be assessed through validity, form, ability to perform, annotation, and debtor default. A notarized promise gives the creditor a far stronger and broader range of claims, especially cancellation and registration of title. Under private agreements, rights are substantially narrowed and the dispute often becomes one of refund and unjust enrichment.

The most important advice is therefore that the agreement should be drawn up by a notary as an official deed; the property, parties, and price should be stated clearly; and an annotation should be entered where possible. At litigation stage, the alternative rights under Article 125, loss of rent from delayed delivery, rescission, refund, and registration claims must be properly distinguished according to the facts. Otherwise, even a seemingly meritorious case may be lost because the wrong remedy was requested or the required form was missing.

Promises to sell immovable property and related disputes are among the rare areas of real-estate law in which effective representation requires both detailed command of legislation and a holistic reading of Court of Cassation precedents. Every case must be examined in detail to determine the correct action and remedy strategy.