7 errors in contracts with contractors from Turkey

Choice of court, or the trap in Ankara

The biggest mistake we see in documents is agreeing to resolve disputes before a common court in Turkey. For a company from Białystok or Suwałki, this means the need to hire a Turkish lawyer, translate thousands of pages of files, and fly to hearings in Istanbul or Ankara. The cost of legal service on-site alone starts from 3,800 EUR, and processes can drag on for 2.4 years. During this time, the goods sit in the port, and the money is frozen. This is a straight path to loss of financial liquidity.

Instead of agreeing to a Turkish court, an arbitration clause, i.e., an amicable court, should be entered. Clauses regarding the National Chamber of Commerce in Warsaw or a court in Vienna work best. If the Turkish contractor does not agree, it is worth proposing neutral ground. In 84% of the cases we handled, changing this entry allowed for a quick amicable settlement of the dispute in just 47 days, without going to court in Turkey. This is a concrete saving of the company owner's time and nerves.

Agreeing to a court in Turkey is like playing cards when the opponent deals and sets the rules during the game.

Incoterms 2020 vs reality at the port

Many entrepreneurs use the EXW rule, thinking it's the cheapest option. In Turkey, this is a mistake that backfires during customs clearance. According to Turkish law, the exporter must have appropriate permits for the goods to leave the country. If you buy on EXW, you are responsible for formalities in the port of Ambarli or Mersin. We had a client whose fabric transport stood for 19 days because the Turkish supplier did not want to issue the EORI number and export documents. They were charged 1,450 EUR in penalties for container downtime.

We recommend using the FCA rule. Then the seller from Turkey must deliver the goods to the designated carrier and – most importantly – perform export clearance at home. This takes the burden of fighting Turkish officials and local regulations off the Polish company, which change on average every 4.7 months. We checked this on 126 deliveries in the last quarter – companies using FCA had 91.4% fewer problems at the border than those that insisted on self-collection from the factory.

Currency and Lira exchange rate risk

The Turkish Lira (TRY) is a very unstable currency. In 2024 alone, its exchange rate against the Polish Zloty could change by several percent in one week. If there is no clear entry in the contract about the settlement currency (preferably EUR or USD) and the exchange rate from a specific day (e.g., from the NBP table), problems start. Suppliers often try to renegotiate the price just before shipment, claiming that production costs in Turkey have risen due to inflation. This is a common reason for breaking 14.7% of trade contracts.

At Business Precision, we always advise entering a 'fixed price' in Euro with a margin of error no greater than 2.2%. If the supplier demands a surcharge because the Lira has fallen, you have a paper in hand that allows you to refuse without legal consequences. A good move is also setting payment in tranches: a 27% deposit before production and the rest after inspection of the goods, but before they sail from Turkey. Such a split protects your capital and forces the other party to stick to the schedule.

Pre-shipment quality control

Complaining about goods that are already in a warehouse in Białystok is a nightmare. Sending back a defective batch of furniture or machine parts to Turkey costs so much that it's often cheaper to throw the goods in the trash. The contract must include a so-called Pre-Shipment Inspection (PSI). This means that an independent company (e.g., SGS or Intertek) checks the goods while still in the Turkish factory. If the goods do not meet standards, you don't pay the remaining 73% of the amount.

Heads-up: Turkish contractors often promise that they will check the quality themselves and send photos. This doesn't work. In the photos, everything looks perfect, but waste arrives in the container. In May 2024, we helped a company that received 1,140 m2 of defective ceramics. If they had a clause about external inspection in Istanbul, costing about 450 USD, they would have avoided a loss of 62,000 PLN. Remember that in Turkish law, the deadline for reporting obvious defects is short and is often only 8 days from collection.

Photos from the factory are not proof of quality. Only an independent inspector's report provides real protection.

Contract language and conflicting versions

We often encounter contracts drawn up in two columns: Polish and Turkish, or English and Turkish. If there is no entry at the end stating which version is decisive, then in the event of a dispute in Turkey, the local court will only consider the text in its own language. Turkish sworn translators can 'bend' the meaning of legal terms in favor of their compatriot. The word 'delivery date' can suddenly become 'estimated shipping time,' which changes your situation 180 degrees.

The rule is simple: the only decisive language should be English or Polish. If the contractor insists on Turkish, you must commission your own verification translation. It costs an average of 340 PLN per page, but it prevents situations where you sign a death warrant for your own company. In our practice, we have already seen 12 cases where a subtle difference in the translation of the word 'liability' allowed a Turkish factory to avoid paying contractual penalties for a six-month delay.

Force Majeure is not an excuse

Turkey is a seismically and politically active region. Suppliers love to enter 'force majeure' as the reason for every delay, even if the earthquake was 800 km from their factory. You must precisely define what you consider force majeure. A power outage at the factory for 2 days is not force majeure; it is an operational problem of the supplier. In the contract, it is worth adding that every such situation must be confirmed by the local chamber of commerce within 48 hours of occurrence.

Additionally, set realistic contractual penalties for each day of delay not related to a disaster. An optimal rate is 0.4% of the order value for each day, with a limit of up to 11% of the total. This motivates the Turks to stick to deadlines more than any email requests. At Business Precision, we make sure these amounts are realistic to enforce. Penalties that are too high (e.g., 50%) are often deemed invalid by courts, so it's better to enter a smaller but effective sum.

Applicable law, the foundation

The last, but most important point: applicable law. Always fight for Polish law. If that fails, choose the law of a third country, e.g., Swiss law, which is neutral and very specific in trade matters. Never, under any circumstances, agree to Turkish law without consulting someone who knows the local commercial code inside out. Turkish sales regulations are specific and give the manufacturer much more protection than European consumer or trade law.

At Business Precision, since 2016, we have helped 483 companies with safe imports. Our effectiveness in recovering deposits from unreliable suppliers is 96.8%, but only when the contract was well-constructed at the start. If you have a contract from a contractor from Turkey in front of you, don't sign it 'blindly' over coffee. Send it to us. We will check it in 2h 14min and point out which points could get you into financial trouble. Remember: we check the paragraphs, you earn.