A Turkish Business Sale Includes Stock That Does Not Exist: Inventory Shortfall Claims
Quick summary
| Question | Assessment |
|---|---|
| Focus | A Turkish Business Sale Includes Stock That Does Not Exist: Inventory Shortfall Claims |
| Legal starting point | TCO Articles 19, 112 and, where applicable, 219–227 |
| Key record | Stock definition and valuation schedule |
| First action | Preserve the original count, reconcile movements and notify the correct contractual claim with an itemised stock schedule. |
The issue and the legal distinction
In a share sale the company still owns the stock, so the buyer’s contractual claim against the seller commonly depends on warranties or the price mechanism. In an asset sale, the obligation to deliver identified goods may be direct.
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Determine whether obsolete, consigned, customer-owned or pledged stock was included in the valuation. A warehouse total without ownership classification can exaggerate the shortfall.
What changes the assessment
Reconcile physical counts with dispatches and receipts around completion. Examine serial numbers, weighbridge records, cut-off procedures and customer returns. A count performed weeks later needs a movement bridge back to the relevant date.
Invite a joint count where practical, but do not postpone contractual notification while waiting indefinitely for agreement. Keep the count methodology reproducible.
Legal framework
Provisions to examine: TCO Articles 19, 112 and, where applicable, 219–227.
Start with the transaction documents and the identity of the promise-maker. A share purchase transfers shares; it does not automatically transfer the target company’s own claims to its new shareholder. A price-adjustment procedure, a warranty claim and a corporate claim may use different claimants and calculations.
Under TCO Article 19 the actual contractual arrangement needs examination; Article 112 provides the general breach framework where Turkish obligations law applies. Contractual notice mechanisms should be checked alongside mandatory limitation rules. An agreed accountant’s task also needs to be distinguished from the jurisdiction of a court or arbitral tribunal.
Evidence to preserve
- Stock definition and valuation schedule.
- Completion count sheets.
- Goods movements around completion.
- Ownership and consignment records.
Keep the original documents, identify their source and record when they were received. Preserve the version effective when the promise was made. Where a document is held by the opponent, request lawful preservation and consider the appropriate procedural route rather than trying to obtain it through unauthorised access.
A hypothetical example
Suppose a completion count shows fewer components than the seller’s schedule. Check dispatches immediately before and after the count, customer-owned stock and units already rejected.
A later warehouse inspection cannot be compared directly to the completion schedule without that bridge. If a valid price adjustment already compensates the shortage, a second claim for exactly the same value needs careful treatment.
This illustration explains the distinction; it is not a reported case or a prediction of an outcome.
Practical next steps
Preserve the original count, reconcile movements and notify the correct contractual claim with an itemised stock schedule.
Build the first notice around the particular evidence: stock definition and valuation schedule, the relevant date, the alleged failure and the requested response. Keep proof of delivery. A preservation request, a demand for performance and a final election of remedies can have different consequences; choose them with the contract and deadlines in view.
Remedies and financial loss
Use the agreed stock valuation or legally applicable delivery remedy. Do not automatically equate missing units with retail selling prices including unearned margins.
Procedure for a client outside Turkey
Nationality alone does not decide governing law or forum. Review the parties, place of performance, contractual choice, any arbitration provision and applicable mandatory rules. Consumer and employment matters can require protected-forum analysis. Turkish proceedings may also require a mediation step or security analysis depending on the dispute; neither should be assumed applicable to every case.
For a Turkish civil case, counsel can consider whether evidence preservation under HMK Articles 400 onward or interim relief under Articles 389 onward is justified. These are different measures with specific conditions, possible security and follow-up duties. A general fear of nonpayment does not establish entitlement to every injunction. Calculate the actual notice and filing calendar before waiting for a voluntary reply.
Primary legislation and official sources
- Turkish Code of Obligations No. 6098
- Code of Civil Procedure No. 6100
- International Private and Procedural Law No. 5718
Apply the wording and amendments effective for the relevant transaction and procedural step. A historical enactment text does not by itself establish the current rule.
Frequently asked questions
Can obsolete stock count as missing stock?
It may create a valuation or warranty issue rather than a physical shortage. The contract’s stock-quality definition determines the distinction.
What is the main legal distinction?
In a share sale the company still owns the stock, so the buyer’s contractual claim against the seller commonly depends on warranties or the price mechanism. In an asset sale, the obligation to deliver identified goods may be direct.
Which fact can change the legal assessment?
Reconcile physical counts with dispatches and receipts around completion. Examine serial numbers, weighbridge records, cut-off procedures and customer returns.
Which documents should I preserve?
stock definition and valuation schedule, completion count sheets, goods movements around completion, ownership and consignment records. Preserve the original versions and the dates on which they were received.
What should I do first?
Preserve the original count, reconcile movements and notify the correct contractual claim with an itemised stock schedule.
How should the claimed loss be calculated?
Use the agreed stock valuation or legally applicable delivery remedy. Do not automatically equate missing units with retail selling prices including unearned margins.
Which legal provisions should be examined?
TCO Articles 19, 112 and, where applicable, 219–227. Governing law, transaction classification and mandatory rules determine their application.
How could this issue arise in practice?
Suppose a completion count shows fewer components than the seller’s schedule. Check dispatches immediately before and after the count, customer-owned stock and units already rejected. This is a hypothetical illustration, not a reported case.
Does sending a complaint stop every deadline?
No. Contract notice, limitation, appeal and procedural periods can differ. A lawyer should calculate the dates from the actual contract and service records; informal negotiation does not automatically preserve every right.
When should a technical or accounting expert be involved?
Use an appropriately qualified expert where the disputed fact requires specialist analysis. Define the question using completion count sheets and goods movements around completion; preserve the original material before corrective work.
Can this matter be assessed while I am abroad?
An initial assessment can start with the contract, chronology and the records listed above. Formal representation, any personal attendance and inspection requirements depend on the case.
What should a settlement specify?
Identify the parties, covered claims, payment, remaining performance and any release. Account for third-party recoveries and do not assume a partial payment settles every related obligation.
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