Made-to-Order Goods from Turkey: When the CISG Covers Manufacturing and Service Contracts
Ordering a product that has not yet been manufactured does not, by itself, take the contract outside the United Nations Convention on Contracts for the International Sale of Goods (CISG). Article 3(1) treats contracts for goods to be manufactured or produced as sales, unless the ordering party undertakes to supply a substantial part of the materials necessary for that production. Article 3(2) creates a separate exclusion where the preponderant part of the supplier’s obligations consists of labour or other services.
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Those two rules matter when a foreign buyer commissions Turkish machinery, components, textiles or another manufactured product, or when an overseas supplier delivers equipment for a Turkish project. The commercial label manufacturing agreement does not determine the answer. This guide explains the treaty’s scope, the evidence needed to classify the transaction and the consequences of combining goods, installation, technical assistance and buyer-provided inputs in one contract.
Quick answer and legal summary
| Question | Rule | Evidence |
|---|---|---|
| Goods manufactured after the order | Article 3(1) CISG | Supply commitment and goods description |
| Buyer provides a substantial part of materials | Article 3(1) exception | Who supplies which production inputs and their significance |
| Supplier mainly provides labour or other services | Article 3(2) exclusion | Obligations and contractual price structure |
| International sale threshold | Article 1 and declarations | Parties’ relevant places of business and treaty status |
| Ownership of goods | Article 4 | Separate applicable-law determination |
Article 3 is a scope rule, not the complete applicability test
The starting point is the official UNCITRAL CISG materials. Article 1 addresses contracts between parties whose places of business are in different States and the relevant routes through Contracting-State status or private international law. Article 3 then helps determine whether the transaction falls within the sale-of-goods category. Both questions must be answered; a manufactured product alone does not establish every condition for treaty application.
Identify the actual contracting companies and their relevant places of business. The nationality of a shareholder, the language of the document and the currency of payment do not substitute for that inquiry. A foreign-owned Turkish company and its overseas parent are distinct parties, and the contract may have been signed by only one of them. Keep the legal entity, address and role of each participant clear.
The Convention also has exclusions, including the particular transactions listed in Article 2, and Article 6 allows the parties to exclude its application or vary its effect within the treaty’s limits. The agreement, the relevant State status and any applicable declarations must be checked. The UN depositary status record is an official source for that treaty information.
Custom manufacturing can still be an international sale
Article 3(1) expressly includes goods that are to be manufactured or produced. The fact that the seller must cut, assemble, programme, finish or otherwise make the ordered goods is therefore not an automatic reason to classify the entire transaction as services. The legal analysis should start with what the seller undertakes to deliver and the treaty’s stated exception.
Describe the commercial output precisely. A contract for identified components made to the buyer’s drawings differs factually from an open-ended engagement to provide personnel or engineering advice. Both can involve skilled labour, but the presence of labour in production cannot alone erase the first paragraph’s express treatment of manufactured goods as sales.
Specifications, prototypes and acceptance tests help establish the contractual subject. Preserve the final drawings, approved revisions, quantities and delivery obligations. A disagreement about whether the goods conform to those specifications is different from the preliminary question whether the Convention governs the sales obligations at all. Do not use a defective result as proof that the contract was never a sale.
The supplier’s commercial description is not decisive. Calling itself a service provider, subcontractor or solution partner does not replace analysis of its actual obligations. Equally, putting sale agreement at the top of a document does not make a genuinely service-dominant engagement fall within the Convention. The operative terms and the transaction’s substance must be examined together.
Buyer-supplied materials trigger a separate inquiry
The exception in Article 3(1) concerns an undertaking by the ordering party to supply a substantial part of the materials necessary for manufacture or production. Identify what the buyer is contractually required to supply, not simply what it happened to send after a dispute arose. The obligation can be found in schedules, purchase orders and incorporated specifications as well as the main document.
Prepare an input schedule identifying the materials, their function, source and commercial value. Distinguish the buyer’s own supply obligation from a seller’s purchase of materials from a nominated supplier. The same physical component can enter the project through different contractual arrangements, and those arrangements should not be treated as identical without explanation.
The treaty does not state a universal percentage that settles substantiality in every transaction. A careful opinion should identify the relevant values and technical role and explain the method used to assess them. Do not invent a fixed fifty-percent safe harbour or assume that any buyer-provided item, however limited, automatically excludes the Convention.
Keep designs, licences, tooling and raw materials separately identified. They can all matter commercially, but the parties should not simply add every payment or contribution into a materials total without legal analysis. Whether a particular input belongs in the Article 3(1) assessment depends on its character and role in the agreed production. An intellectual-property permission and a supply of physical production materials answer different questions.
Goods plus installation: Article 3(2) examines the supplier’s obligations
Article 3(2) excludes contracts in which the preponderant part of the obligations of the party furnishing the goods consists of labour or other services. This is a different test from the buyer-supplied-materials exception. One asks what the buyer supplies for production; the other asks what predominantly constitutes the supplier’s promised performance.
List the equipment or goods alongside installation, commissioning, training, maintenance, design work and other services. State who performs each obligation, whether it is mandatory, its timing and any separately identified price. A single project total without that breakdown can make it difficult to assess the balance of obligations or to explain later changes.
Installation does not automatically exclude every equipment contract. Conversely, delivery of some physical items does not automatically bring a service-dominant project within the Convention. The assessment must explain the whole contractual undertaking. A commercial preference for one legal regime cannot substitute for the actual balance of goods and services.
Price allocation can be important evidence, but a contractual label should not be treated as an infallible legal conclusion. Preserve the basis for the allocation and any changes made during negotiation. A nominal goods price inserted into a substantially different arrangement should be assessed against the real obligations rather than accepted without examination.
One project can contain more than one contract
A master agreement, individual purchase orders and a separate maintenance agreement may form one connected commercial project without necessarily being a single contract for every legal purpose. Identify how the documents incorporate each other, whether orders require separate acceptance and which entity owes each obligation. The Article 3 analysis needs a defined contract to assess.
Do not artificially separate obligations merely to obtain a preferred result, but do not automatically merge every later service contract into the original equipment sale either. The parties’ communications, wording and performance can be relevant to interpretation under Articles 8 and 9. Preserve the documents that show how the transaction was actually agreed.
Changes after signature also need attention. A variation adding substantial engineering work or replacing a finished-goods obligation with a personnel engagement should be analysed on its terms. The original classification should not be repeated mechanically where the legal obligations materially changed. Record when the amendment took effect and which deliveries it covers.
Where several suppliers participate, distinguish the main contractor’s promise to the buyer from its subcontracting arrangements. A seller’s decision to outsource installation does not necessarily remove that obligation from its contract with the buyer. The relevant question remains what the particular party agreed to provide, not only which employees physically perform the task.
Intellectual property and ownership are not fully resolved by CISG classification
Article 4 states that the Convention governs formation of the sales contract and the seller’s and buyer’s rights and obligations arising from it, while generally excluding validity and the effect of the contract on property in the goods. A conclusion that the CISG applies therefore does not settle every question about title, corporate authority or the validity of a contractual term.
A manufacturing agreement can also contain licences and know-how obligations. The international IP licence guide addresses the separate governing-law issue, while the patent licensing and technical-information guide explains permission and disclosure questions. Do not describe CISG coverage of a sale as an assignment of the buyer’s designs or the supplier’s technology.
Physical tooling also needs its own terms. Ownership, storage, maintenance and return of a mould can be commercially significant even where the finished goods are governed by the Convention. Identify the asset and applicable legal rule instead of assuming that payment for the finished product automatically transfers every production tool.
Choosing Turkish law and choosing a court are different decisions
Article 6 permits exclusion of the CISG. An agreement should make the intended position clear rather than leave the issue to an assumption that a reference to Turkish law necessarily excludes the Convention. The legal effect of the choice clause must be assessed with the applicable treaty framework and the contract as a whole.
A court or arbitration clause answers a different question: where and through which procedure a dispute will be decided. It should not be presented as determining whether Article 3 treats the transaction as a sale. The foreign-court jurisdiction clause guide explains a separate Turkish private-international-law issue.
Likewise, an Incoterms reference does not itself answer every question about treaty application, ownership or dispute resolution. Identify the incorporated edition and rule, then analyse the remaining obligations. A delivery term can allocate important risks and costs without replacing the entire legal framework for formation and remedies.
Build a classification file before a performance dispute
A useful file begins with the contracting parties, the relevant places of business and the complete signed documents. Add the goods and services schedule, the buyer-input schedule, price allocation, technical specifications and amendments. State which facts support the proposed classification and which remain uncertain. This is a practical preparation method, not a statutory requirement to use a particular form.
Once the governing framework is established, assess the actual breach under the applicable provisions. Late delivery, non-conforming machinery, missing technical documentation and failure to install can require different remedial analysis. Do not jump directly from a delay to an assumed right to cancel without examining the contract and the relevant legal conditions.
The classification can also matter to related financial and customs work without determining it. The royalty and customs-value guide addresses a distinct question. A sale governed by the CISG is not automatically exempt from import duties or product-specific regulatory obligations.
The final conclusion should identify the contract assessed, the Article 3 route, the assumptions about materials and services and any separate issues outside the Convention. That is more useful than a broad statement that all custom orders are services or all deliveries of equipment are sales. The legal answer must follow the actual obligations, not the label most convenient after a dispute begins.
Five practical steps for a Turkish factory order involving services
Step one: identify the seller and the buyer, not merely the factory. A transaction can involve a German commissioning company, a Turkish manufacturer and an independent installation contractor. The CISG classification starts with the legal persons who undertake the sale and the relevant places of business under Article 1. A factory address on an invoice is evidence to inspect, not a substitute for identifying the legal contracting seller. The complete purchase order, acceptance, amendment trail and any agency documentation should be placed together.
Step two: separate the manufacturing inputs. Article 3(1) does not exclude every project where the buyer supplies technical drawings or design instructions. The statutory question is whether the ordering party undertakes to supply a substantial part of the materials necessary for manufacture or production. The parties should therefore list steel, fabrics, electronic components, raw ingredients, proprietary parts and other physical inputs supplied by each side, together with evidence of their value and significance. Do not apply an invented percentage threshold as if the Convention itself contained one. The UNCITRAL Convention materials and its case-law digest explain why the assessment is tied to the actual transaction.
Step three: isolate the supplier’s service obligations. Under Article 3(2), the relevant question is whether the preponderant part of the obligations of the party supplying the goods consists in labour or other services. Delivery, commissioning, installation, training, maintenance and engineering must be mapped to the promised result; not every ordinary manufacturing activity turns a sale into a predominantly services contract. Read the statement of work and any price allocation, but do not treat an accounting label as a conclusive legal classification.
Step four: document separable contracts and amendments. A machinery sale and a long-term maintenance agreement may be separate contracts, while a single turnkey contract can create a difficult mixed-obligation question. The resulting classification cannot be settled simply by renaming the contract a “service contract” or “manufacturing agreement.” Identify who accepted each obligation, whether prices and obligations were negotiated together, and how amendments changed the respective duties. The assessment must be made for the actual legally binding arrangement.
Step five: decide what follows once the CISG scope is determined. If the Convention applies, issues such as conformity, delivery obligations and contract remedies must be considered within the Convention’s structure. Article 4 nevertheless leaves matters such as the contract’s effect on ownership outside its general scope, so a separate applicable-law analysis can still be necessary. A jurisdiction or arbitration clause determines a different question from substantive treaty coverage. Preserve the evidence for each issue instead of treating the CISG finding as a universal answer to intellectual-property rights, title, tax or licensing responsibilities.
Frequently asked questions
Can made-to-order goods fall under the CISG?
Yes. Article 3(1) treats goods to be manufactured or produced as sales, subject to its buyer-supplied-materials exception and the other applicability requirements.
Does any material supplied by the buyer exclude the Convention?
No. The exception concerns a substantial part of the necessary materials. The actual undertaking and contribution must be assessed.
Is there a universal statutory percentage for substantial materials?
Article 3 does not prescribe a fixed percentage resolving every case. The assessment should explain its factual and legal basis.
Does installation automatically make an equipment contract a service contract?
No. Article 3(2) asks whether labour or services form the preponderant part of the supplier’s obligations.
Are the two paragraphs of Article 3 the same test?
No. Paragraph 1 addresses buyer-supplied production materials; paragraph 2 addresses service-heavy obligations of the supplier.
Does the contract title determine the answer?
No. The operative obligations and transaction must be examined, whether the document is called a sale, manufacturing or service agreement.
Does CISG coverage determine ownership of the goods?
Article 4 generally excludes the contract’s effect on property in the goods. Title requires its own applicable-law analysis.
Can the parties exclude the CISG?
Article 6 permits exclusion. The intended position should be expressed clearly and assessed with the applicable treaty framework.
Does a forum clause replace the Article 3 analysis?
No. Dispute forum and the substantive law governing the transaction are separate questions.
What records are most useful for a mixed supply contract?
Keep the complete agreement, goods and services breakdown, buyer-input obligations, price allocation, specifications and amendments, tied to the actual contracting parties.
Primary sources
See the official UNCITRAL Convention materials, particularly CISG Articles 1–4, 6, 8–10, and the UN treaty status record. The University of Basel’s reproduction of Article 3 provides the provision’s text. This article is an explanation, not a determination of the law governing a particular transaction.
Discuss a Turkey-linked manufacturing or mixed supply contract
Identify the contracting parties, goods, services and any urgent delivery or dispute deadline. Arrange a secure channel before sending confidential specifications or contracts.
Legal assistance in Türkiye for clients abroad
Bakırcı & Keskin Law Office operates physically from Mersin and coordinates Turkish legal matters for clients across Türkiye and abroad. A preliminary review of manufacturing contracts should include the complete agreement, materials list, services allocation and dispute notices. Contact the law office.
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