Commercial Agent Portfolio Compensation in Turkey: TCC Article 122 for Foreign Principals

1. Article 122 applies to the statutory commercial-agent relationship

Turkish Commercial Code Article 102 defines a commercial agent as an independent commercial intermediary who, without being an employee, commercial representative, commercial proxy, travelling salesperson or similar dependent person, undertakes on a continuing basis either to negotiate contracts concerning a commercial enterprise within a specified place or region or to conclude such contracts in the name and on behalf of the merchant.

The legal classification follows the real relationship rather than the document title. Calling a Turkish counterparty a “consultant,” “sales partner,” “representative” or “business developer” does not prevent agency rules from applying if the contractual structure and actual performance satisfy Article 102. Conversely, a distributor that buys and resells goods on its own account is not automatically an agent, although Article 122(5) can extend portfolio-compensation principles to certain exclusive distribution and similar monopoly relationships where equity requires.

For a foreign manufacturer, software vendor, medical-device producer or consumer brand entering Turkey through a local intermediary, classification should be completed before the agreement is signed. The distinction affects commission, authority, termination, post-contract non-compete restrictions and the possible Article 122 exit cost.

The principal should also determine whether the local intermediary is authorised merely to negotiate or additionally to conclude contracts in the principal’s name. That authority question is separate from the compensation right, but it changes the principal’s exposure to third parties and should be stated precisely in the agreement.

2. Article 122 requires three cumulative conditions after the agency relationship ends

Article 122(1) sets three substantive conditions. They are cumulative: satisfying only one or two does not complete the statutory test.

First, because of the new customers brought by the agent, the principal must continue to derive substantial benefits after the contractual relationship has ended. Second, as a consequence of termination, the agent must lose the right to commissions that the agent would have earned from transactions already concluded or expected within a short period with customers brought into the business by that agent if the relationship had continued. Third, considering the circumstances of the individual case, payment of compensation must be equitable.

The claim therefore is not an automatic termination fee. A contract ending does not itself establish liability. The factual file must show what customer portfolio the agent created, what continuing benefit the principal obtained from that portfolio, what commission opportunity the agent lost and why the resulting amount is equitable.

3. “Substantial benefit” requires a continuing post-termination advantage for the principal

The first condition focuses on the principal’s position after termination. The relevant statutory benefit arises from new customers found by the agent. Evidence should therefore distinguish pre-existing principal customers from customers actually introduced or developed through the agent’s activity.

A foreign principal should preserve customer-origin data throughout the relationship. CRM records, quotation history, lead records, first-contact evidence, order histories, territory reports and commission statements are more useful than a broad post-termination assertion that “all Turkish customers belong to the agent.”

The benefit must continue after termination and be substantial. Repeated orders from customers introduced by the agent are the most direct factual example, but the inquiry is not limited to a single transaction count. The nature of the market, customer retention, expected repeat purchasing, contractual renewals and the principal’s ability to exploit the portfolio after the agent leaves all bear on the economic analysis.

If the principal permanently exits Turkey, loses regulatory permission, stops the product line or cannot lawfully continue business with the customers, the continuing-benefit analysis changes materially. The compensation calculation should therefore use the actual post-termination commercial position rather than a fictional assumption that every historic customer will indefinitely produce revenue.

4. The agent must lose commission that continuation of the relationship would have produced

Article 122(1)(b) requires a second economic element: because the agency ended, the agent must lose a right to remuneration arising from business with the customers the agent brought to the enterprise, where the remuneration would have been earned if the contractual relationship had continued.

The agency agreement’s commission model is therefore central. The parties should be able to identify what transactions generate commission, when the commission accrues, the applicable percentage or formula, whether repeat orders are commissionable, and what post-termination orders remain payable under Articles 113–116 and the contract.

Portfolio compensation is different from already-earned unpaid commission. An agent may have a separate claim for commission on transactions that were concluded or became commissionable under the TCC. Article 122 addresses the additional loss created by the end of the ongoing relationship and the principal’s continuing benefit.

The foreign principal should reconcile all commission accounts at termination. Mixing unpaid current commission, damages for defective notice, portfolio compensation and non-compete compensation into one undifferentiated “termination claim” makes settlement and litigation analysis unnecessarily difficult.

5. Even when economic benefit and commission loss exist, the result must be equitable

Article 122(1)(c) requires the court or parties to assess fairness in light of the concrete circumstances. This is an express statutory condition, not an optional adjustment at the end of the formula.

Relevant commercial facts can include the length and intensity of the relationship, the agent’s contribution to customer creation, brand strength, marketing expenditure funded by the principal, territory exclusivity, customer loyalty to the product rather than the agent, the agent’s post-termination competitive activity and the degree to which the principal can continue exploiting the customer base.

Equity analysis should not override the statutory cap or create compensation where the other Article 122 conditions do not exist. It is used within the statutory structure to determine an appropriate amount once the foundational conditions are shown.

For settlement purposes, both sides should build a customer-by-customer table rather than relying on a percentage selected without evidence. A defensible table identifies customer origin, revenue, commission, expected future transactions, principal benefit and any adjustment relevant to equity.

6. Article 122(2) sets a maximum based on the average annual remuneration

The compensation may not exceed the average annual commission or other remuneration received by the agent as a result of the last five years of activity. If the agency relationship lasted for less than five years, the average for the actual operating period is used.

This is a maximum, not an automatic award equal to one year’s average remuneration. The substantive conditions and equity analysis still determine the amount below or up to that ceiling.

For example, a five-year average annual remuneration of EUR 180,000 creates a statutory maximum of EUR 180,000 under Article 122(2); it does not establish that EUR 180,000 is automatically due. The continuing benefit, lost commission and equity calculation can produce a lower figure or no compensable amount if a statutory condition fails.

The calculation should use all remuneration falling within the statutory phrase “commission or other payments” attributable to the agency activity, analysed according to the contract and accounting records. Currency, VAT treatment and the date for conversion or interest are separate payment questions that should be addressed in the settlement or claim.

7. Article 122(3) excludes compensation in two termination scenarios

The first statutory bar applies where the agent terminates the agency agreement without an act of the principal that would justify the agent’s termination. In that case, Article 122(3) states that the agent cannot claim portfolio compensation.

The second bar applies where the principal terminates for just cause because of the agent’s fault. A principal relying on this rule should document the exact contractual and factual breach before sending the termination notice. A conclusory notice saying only “breach” or “loss of confidence” creates a weaker evidentiary file than a notice identifying the obligation, breach, dates, prior notices and legal basis.

The termination ground should be distinguished from Article 121 notice requirements. Under Article 121(1), either party may terminate an indefinite-term agency agreement with three months’ notice, while both definite and indefinite relationships may be terminated immediately for just cause. Article 121(4) separately imposes liability for loss caused by terminating without just cause or without observing the three-month notice period where that rule applies.

A principal can therefore face different legal issues at the same time: defective notice damages under Article 121 and portfolio compensation under Article 122. Each must be analysed independently.

8. An agent cannot validly waive Article 122 compensation in advance

Article 122(4) expressly states that the right to portfolio compensation cannot be waived in advance. A clause signed at the beginning of the agency relationship saying “the agent irrevocably waives any claim under Article 122” therefore cannot be treated as a reliable contractual elimination of the statutory right.

Foreign principals should remove such clauses from template agreements governed by Turkish law. Keeping an ineffective waiver does not improve protection and can create the false impression internally that termination carries no Article 122 risk.

The prohibition concerns advance waiver. Once the relationship has ended and an actual claim has arisen, settlement of a concrete dispute is a different legal question. A post-termination release should identify the claims being settled, the amount and payment mechanics, and should be executed with clear authority and informed intent.

The agreement can still contain detailed factual and procedural provisions that help determine the claim: customer ownership records, CRM access, commission statements, return of data, reconciliation on termination and evidence-preservation obligations. Those clauses do not waive Article 122; they improve the factual record needed to apply it.

9. The Article 122 claim must be asserted within one year after termination

The second sentence of Article 122(4) requires the compensation right to be asserted within one year from termination of the contractual relationship. The parties should record the legally effective termination date precisely because that date starts the statutory period.

An agent should not rely on informal negotiations extending indefinitely beyond that period. The claim should be clearly asserted within the statutory year with enough specificity to identify the legal right being invoked.

A principal receiving a demand should preserve the notice, verify the termination date and immediately assemble the customer and commission records. The one-year rule does not justify destroying records or postponing the substantive review until the deadline has expired.

Where the parties dispute whether the relationship ended on the notice date, at expiry of a notice period, at the end of a fixed term or upon an immediate just-cause notice, the termination-date issue can materially affect Article 122(4). Contract drafting should prevent that ambiguity.

10. Article 122(5) can extend the rule to exclusive distributors and similar monopoly relationships

Article 122(5) states that, unless contrary to equity, the provision also applies upon termination of exclusive-distribution arrangements and other continuous contractual relationships that grant similar monopoly rights.

This extension matters to foreign suppliers because many Turkish market-entry agreements are drafted as distributorships rather than agencies. The local distributor buys products and resells in its own name, so it is not a statutory agent under Article 102; nevertheless, an exclusive distribution structure can fall within Article 122(5).

The statutory language does not say that every reseller automatically receives portfolio compensation. The relationship must have the exclusive/monopoly-type features contemplated by Article 122(5), and application must not be inequitable. The underlying Article 122 logic—customer contribution, continuing benefit, economic loss and equity—remains central to the analysis.

Foreign manufacturers should therefore review their “exclusive distributor” exit exposure separately instead of assuming that avoiding the word “agent” eliminates all portfolio-compensation risk.

11. A foreign principal must analyse the governing-law clause before applying Article 122

An international agency agreement often contains a foreign-law clause, arbitration clause or foreign-court clause. Turkish conflict-of-laws rules must be analysed before concluding that Article 122 automatically governs every Turkey-related agency dispute.

International Private and Procedural Law No. 5718 Article 24 provides the general framework for contractual obligations: the parties may choose the governing law, and in the absence of a valid choice the contract is governed by the law most closely connected under the statutory rules. Mandatory rules, public policy, forum and specific relationship characteristics can require additional analysis.

Accordingly, a foreign principal should not copy a Turkish Article 122 calculation into a contract governed by another law without first determining the applicable law and forum. Equally, a foreign-law clause should not be treated as an automatic guarantee that Turkish mandatory protections can never be relevant to a Turkey-centred relationship.

The governing-law clause, dispute-resolution clause and Turkish market structure should be reviewed together at contract formation, not only after termination.

12. Contract drafting should create an evidence trail for the eventual termination analysis

A commercially strong Turkish agency agreement identifies territory, customer groups, authority to negotiate or contract, commission events, payment dates, targets, exclusivity, reporting, marketing duties, compliance obligations, duration, renewal, ordinary notice and just-cause events.

For Article 122 specifically, the agreement and operating process should make customer origin measurable. The CRM should identify whether a customer was pre-existing, introduced by the agent, generated by the principal or jointly developed. Commission statements should allow repeat-business economics to be reconstructed after termination.

The termination file should contain the agreement and amendments, effective termination notice, proof of service, just-cause evidence if relied upon, customer list, last five years of remuneration, post-termination Turkish customer revenue where relevant, unpaid commission reconciliation and any non-compete document.

If a post-contract non-compete is imposed, Article 123 creates a separate regime: it must be written, limited in duration to a maximum of two years, limited to the agent’s territory/customer circle and relevant contract subject matter, and the principal must pay appropriate compensation for the restriction. Portfolio compensation under Article 122 and non-compete compensation under Article 123 should not be conflated.

Conclusion

For a foreign principal ending a Turkish commercial-agency relationship, TCC Article 122 portfolio compensation is a quantifiable statutory risk, not an automatic one-year termination payment. The agent must establish continuing substantial benefit from new customers, lost commission caused by termination and equity. Any award is capped by the average annual remuneration over the last five years or the shorter relationship period.

The right cannot be waived in advance and must be asserted within one year after termination. Compensation is barred in the termination circumstances specified in Article 122(3), and the rule can extend to exclusive distributors and similar monopoly relationships under Article 122(5). The principal should therefore treat agency classification, governing law, termination grounds and customer/commission evidence as one integrated contract-exit file.