Common Mistakes in Commercial Contracts and Risk Management

The contracts companies sign in their daily operations — supply, service, distribution, lease, confidentiality, partnership — sit quietly in drawers before disputes arise; however, when a disagreement arises, every clause of the contract is examined in detail before court. Years of observations from our Antalya law firm providing commercial contract services to companies show that even the best companies make common mistakes in contract preparation. This guide addresses mistakes we frequently encounter in commercial contracts and ways to avoid them.

Mistake 1: Using Standard Templates

Many companies create new contracts by making small changes to standard templates downloaded from internet or taken from another job. This approach:

• Causes contract to contain provisions incompatible with concrete work,
• Causes parties' specific needs to be missed,
• Causes failure to keep up with legislation changes.

Standard template can be used as starting point; however, every contract must be adapted to concrete business requirements.

Mistake 2: Leaving Payment Terms Vague

The most frequently disputed heading in contracts is payment terms. Common mistakes:

• Vague phrases like "paid when work is completed" — definition of work completion is unclear,
• When invoice will be issued not specified,
• Default interest and consequences of default not written,
• Payment method and bank information missing.

Well-drafted payment clause:

• Net amount and currency,
• Regular payment schedule (advance, interim payments, final payment),
• Date invoice will be issued,
• Payment method,
• Interest rate applicable on delay,
• Conditions for terminating contract when debtor defaults

contains.

Mistake 3: Insufficient Regulation of Delivery and Acceptance

In goods or service procurement, leaving delivery date and acceptance procedure vague leads to significant disputes later. What it means must be clarified:

• "Delivery completed" — physical arrival or acceptance?
• What are technical acceptance criteria for product?
• How long is testing period?
• What happens for non-accepted product?

In service contracts:

• Service scope (Statement of Work),
• Periods and milestones,
• Acceptance indicators,
• Conditions for terminating work

must be clearly regulated.

Mistake 4: One-Sided Liability Limitation

Large suppliers or service providers add broad liability limitation clauses in their favour to contracts. These clauses:

• Limit supplier's liability to fees paid,
• Exclude indirect damages (lost profit, etc.),
• Don't limit customer's liability.

A balanced approach should be requested during negotiation. Under Turkish law, liability limitation cannot be made in case of intent and gross fault; even if such limitation is in contract, it is invalid.

Mistake 5: Signing Indefinite Contracts

Some contracts are arranged with indefinite or auto-renewal clauses. In this case:

• Company cannot exit contract when it wants,
• Price increases are automatically accepted,
• Negotiation power weakens.

Ideal arrangement:

• Definite-period contract,
• Right to terminate by notice (for both parties),
• Notice period before renewal,
• Price increase ceiling on renewal.

Mistake 6: Language and Translation Issues

In contracts with foreign companies:

• Drafting contract bilingually (Turkish + English) is beneficial,
• Which text governs in case of dispute should be specified,
• If translation is inadequate, both parties may understand different content.

Preparing Turkish text of contract through sworn translator and review by both parties' legal counsel is standard practice.

Mistake 7: Skipping Confidentiality Provisions

For trade secrets, customer information, and technical information, confidentiality provisions must be integral part of contract. Common gaps:

• Confidential information not defined,
• Exceptions not specified (like publicly available information),
• Duration of confidentiality unclear,
• Sanctions for breach not written.

Typical confidentiality clause includes:

• Confidential information definition,
• Use restrictions,
• Duration,
• Sanctions on breach,
• Special situations (court request, etc.).

Mistake 8: Missing Intellectual Property Arrangements

Ownership of intellectual property used or produced under contract:

• Who designed?
• Who paid?
• Who will own after contract?
• Can it be licensed, transferred?

must be clarified. In areas like software, design, brand, content, this clarity is critical.

Mistake 9: Neglecting Dispute Resolution Provisions

Where to go when dispute arises must be predetermined:

• Competent court — Turkish court or another country's court?
• Arbitration option — particularly in international commercial contracts,
• Mediation requirement,
• Applicable law.

Choosing foreign jurisdiction or arbitration centre may suit large companies; for Turkish small and medium enterprises, Turkish court may be preferred.

Mistake 10: Failing to Verify Signing Authority

Whether person signing contract is authorised to represent company must be verified. Contracts signed by unauthorised person may not bind company; special approval may be sought or contract may be considered invalid.

For verification:

• Signature circular published in Trade Registry Gazette should be checked,
• If signing by power of attorney, validity of power of attorney should be reviewed,
• If multiple representatives, joint signing authority should be checked.

Mistake 11: Narrowly Drafted Force Majeure

As observed during the pandemic, force majeure clauses are critically important. Good clause:

• Force majeure definition,
• Sample events (war, epidemic, natural disaster, government decision, etc.),
• Suspension of obligations during force majeure,
• Right to terminate if it continues for specific period

contains. Without force majeure clause, parties can be victimised under general legal provisions.

Mistake 12: Skipping End-of-Contract Responsibilities

When contract ends:

• Return or destruction of data,
• Continuing obligations (confidentiality, warranty),
• Payment of outstanding amounts,
• Cooperation in transition period

must be clearly regulated. The "exit" clause is as important as opening clauses.

Digital Storage and Management of Contracts

Digitally indexed storage and access with appropriate authorisations of contracts is important in company management. Contract management system (CLM):

• Tracks deadlines and renewal dates,
• Identifies breaches early,
• Sends automatic notifications during renewal periods.

Legal Support

For commercial contract preparation, negotiation, and dispute management in Antalya, MONA HUKUK provides comprehensive support to companies. Solid contract drafting from start prevents future disputes and minimises company's operational risks. With professional legal support, we make uncertainties predictable; ensuring business relationships are built on solid ground.

Contact us at contact@monahukuk.com or call +90 (242) 606 14 32 to schedule a consultation in Antalya.