Sponsored briefing: Formation of contracts by electronic means in Turkey

The rapid development of industrialisation and globalisation has resulted in the rise of the computer age. With the recent advancement in the areas of computer technology, telecommunications and information technology, living and business styles of people have been significantly changed.

Electronic commerce is one of the products of this change that has a major economic significance in today’s world. Electronic commerce provides the flexibility in terms of place and time. As a result, business relationships are not restricted with the limits of geography and time anymore.

As a consequence of the evolution of electronic commerce, the concept of ‘e-contract/electronic contract’ has entered into our lives.

E-contracts or electronic contracts are defined as the contracts formed by using internet tools, such as e-mails, computer programs or digital signatures.

Establishment of an E-Contract

According to the Turkish Code of Obligations (TCO), mutual and consentaneous declarations of the parties’ intent are required to form a contract. The first declaration of intent is the offer of one party and the following declaration is the acceptance of the other party.

Electronic contracts can also be established by the declaration of intent, in the same way as classical contracts regulated under the TCO. As a rule, declaration of intent is not subject to any form under Turkish Law. Therefore, it can be stipulated in an online conversation or by email or by filling out an order form on a website.

Electronically revealed declarations must contain elements identical with those revealed by the classical methods. The content of the offer must contain the objective and subjective elements of the relevant contract (for instance, in a sales contract; goods and the price; in a lease agreement; property information and rent amount). If the offer lacks such elements, the declaration of intent shall be deemed as an ‘invitation to offer’. Moreover, in order to consider a declaration of intent as an acceptance, such declaration must include the same terms of the offer. Otherwise, it will be considered as a new offer.

Turkish contract law recognises ‘freedom of form’ principle as a rule. Thus, it is not required to form a contract in writing. However, not all contracts are eligible to be concluded electronically and there are some exceptions, those require certain forms and ceremonies, such as:

• Real estate broker agreements (which must be in writing)
• Preliminary contract for sale of real estate (which must be concluded before a notary public)
• Buy-back agreements for real estate (which must be concluded at the Land Registry Office)
• Contracts for the sale of land (which must be concluded at the Land Registry Office)
• Mortgage agreements for real estate (which must be concluded at the Land Registry Office)
• Contract of surety (in which some terms must be handwritten by the guarantor)
• Articles of incorporation (which must be approved by the notary public)

Types of Electronic Contracts

Emails:

Email is a system that allows messages containing text, audio, picture, and video files to be exchanged over closed network or the internet. Email is a form of traditional letter communication that has been transferred through the internet. This method allows the parties to express their intent to mutually conclude a contract in the form of an invitation to offer, an offer and an acceptance.

The TCO does not contain a specific provision regarding the contract formation through emails. However, emails have been ruled by the courts, to constitute a legally binding contract. In recent cases, the Court of Appeals has ruled that the correspondence made by electronic means, such as emails, electronic messengers and social media are deemed as a document. Consequently, the Court of Appeals upholds the validity of an unsigned contract discussed via email; thus, confirming the enforceability of the contract through email.

It is accepted that an email contract is established when the declaration of acceptance reaches the email box. However, it will begin to bear its terms and consequences retroactively from the moment the acceptance email is sent to the person making the offer.

Websites:

Suppliers and providers frequently use their websites to form contracts. In this context, the product or service rendered for sale on the website is an offer made by the supplier/provider and the contract will be established upon the acceptance of the buyer. The declaration of acceptance can be concluded by clicking ‘I accept’ or any similar button or filling out an order form and clicking ‘Submit’ or any similar button.

In this case, the moment of establishment of the contract should be considered when the declaration of acceptance reaches the owner of the webpage, not when the acceptance button is clicked, since these two actions may not be simultaneous.

Distance contracts under the Consumer Protection Law

In Turkish Law, there are special provisions for the contracts concluded in an electronic environment in which one party is a consumer. Such contracts are named as ‘distance contracts’ and regulated under the Consumer Protection Law.

A distance contract is defined as a contract made by written, visual means, telephone, or electronic media or using any other communication tool and without convening with the consumers and in which the delivery or performance of the goods or services to the consumer is agreed upon instantaneously or afterwards.

Contracts concluded electronically are categorised as distance contracts under the Consumer Protection Law. However, even though the contracts concluded by electronic means and distance contracts share some characteristics, they differ in terms of applicable laws.

Pursuant to Consumer Protection Law, there are some terms that must be included in the distance contract, which are broader than the requirements of the Code of Obligations.

For example, in distance contracts, in addition to objective and subjective elements of the relevant contract, conditions and procedures for use of the right of withdrawal, information of the remedies that the consumers may be entitled to, information of competent consumer court or consumer arbitral committee must be included. In addition, some type of consumer agreements, such as subscription agreements, financial services agreements, package tour agreements and timeshare vacation agreements are subject to different sets of rules and have additional requirements.

In the event the buyer is not a consumer and/or the contract is made between the merchants, such contract will not be considered as a distance contract under the Consumer Protection Law. In this case, general provisions of the TCO shall be applicable.

E-signature:

The use of electronic and certificate-based digital signatures is also accepted under Turkish Law. However, such systems are still evolving in Turkey and consequently e-signature is not broadly used in the business life.

The Electronic Signature Law defines electronic signature as data in electronic form that are attached to other electronic data or linked logically to that electronic data and used for authentication. However, the Electronic Signature Law makes a distinction between basic electronic signatures and secure electronic signatures.

In order to qualify as a ‘secure electronic signature’ under the Electronic Signature Law, it must:

• be exclusively assigned to the signature owner,
• be generated with the secure electronic signature creation device which is kept under the sole control of the signature owner,
• enable the identification of the signature owner based on the Qualified Electronic Certificate,
• enable detection as to whether or not the signed electronic data has been altered or not after it was signed.

According to the Electronic Signature Law, a secure electronic signature has the same legal effect as a wet signature. In one case, the Court of Appeal ruled that in case of a conflict between court documents one of which was executed by an electronic signature and the other by a handwritten signature, the document executed by electronic signature would take precedence over the handwritten signature.

However, the Electronic Signature Law does not allow the establishment of every contract by using electronic signature; whereby legal transactions requiring official form or a special ceremony, as well as guarantee contracts, are excluded.

Since Turkish Law does not require a special form for the establishment of contracts generally, contracts concluded by other electronic means (such as emails or websites) are deemed valid, even they are not signed with a secure electronic signature.

Conclusion

Considering the fact that e-contracts reduce costs, save time and eliminate the geographical barriers, e-commerce will be playing an important role in the coming future.

Therefore, it is expected that e-contracts will become more and more popular in today’s world, where technology and digitalisation are rapidly growing. Under Turkish Law, electronic contracts are not subject to different rules when compared to the contracts that are established by classical methods. However, with the technologic developments, some practical differences for the establishment of electronic contracts have emerged. Accordingly, in recent years, Turkish courts started recognising such differences and have been upholding the validity of an unsigned contract that has been discussed via electronic means.