The Legal Definition of Smart Contracts and Their Place in Turkish Law

A smart contract is a contract architecture where the obligations undertaken by the parties are defined in a digital environment, and the fulfillment of these obligations is managed through automated processes by linking them to specific conditions. It involves a system where declarations of intent that create a legal obligation and the code that implements this intent work together. In other words, a smart contract is an infrastructure that programs the performance process, not the contract itself; the text creating the obligation and the legally valid agreement of intent still remain at the core.

In terms of legal nature, smart contracts are in most cases a "text + code" hybrid. The text regulates the rights and obligations of the parties, the liability regime, and dispute resolution within the framework of the Turkish Code of Obligations (TBK). The code, on the other hand, executes the actions (payment, transfer, access permission, blocking, etc.) that will be triggered according to the conditions in this text. The fundamental principle of the design is that it is explicitly stated that the text takes precedence in case of a conflict, and that the code can be updated (upgrade/patch) according to this text. In this way, interpretation, proof, and adaptation mechanisms are preserved.

In terms of formation and form, the rule in the Turkish Code of Obligations is that contracts are largely free; except for cases where a specific form is required by law, contracts concluded electronically can have the effect of a written form with a secure electronic signature. However, for transactions subject to formal requirements and some special types of contracts (for example, elements related to the handwritten requirement in suretyship), an e-signature alone may not be sufficient. Therefore, before switching to a smart contract architecture, the formal requirements of each transaction type should be checked individually.

In evidentiary law, electronic data created with a secure e-signature has the force of a promissory note; this increases the probative value of the parties' statements and approvals. If a secure e-signature is not available, chain records and system logs are accepted as documents and evaluated under the free evidence regime. In practice, the most robust method is to sign the contract text with a secure e-signature, exchange it via KEP (Registered Electronic Mail), show the code versions and hash values ​​in an additional list, and establish a chain of custody with a timestamp.

Due to the prevalence of standardized terms and conditions, the review of general terms and conditions is important. Provisions prepared in advance by one party and not negotiated are subject to review regarding their entry into force, interpretation, and content; unfair terms are considered null and void. In smart contracts related to consumer transactions, prior information, explicit consent, and a technical flow enabling the actual exercise of the right of withdrawal (e.g., “pause/rollback”) are mandatory. Otherwise, there is a risk of administrative sanctions and invalidation.

Automatic execution regarding performance and breach of contract does not negate the rules of default, impossibility, and liability under the Turkish Code of Obligations. For technical risks such as external data source errors (oracle failure), network outages, or protocol changes, the contract should include provisions for suspension, switching to a backup oracle, equivalent performance, and adaptation negotiation. When drafting liability limitation clauses, it should be remembered that prior exemption from liability for gross negligence cannot be agreed upon.

The applicable law and jurisdiction at the international level must be clearly defined. Failure to choose a legal framework may lead to mandatory rules in favor of the consumer. If arbitration is chosen, the venue, rules, and language of the arbitration must be clearly stated; the validity and enforcement of arbitration agreements established electronically should be considered, and on-chain/off-chain processes should be bridged.

From a data protection perspective, it is essential that personal data not be entered into on-chain environments. Data should be stored off-chain as much as possible, and only hash references for verification purposes should be included in the chain. Access, storage, and destruction policies, as well as deletion-destruction-anonymization obligations, must be fulfilled, and the principle of data minimization must be observed.

In practice, a three-step framework is proposed for success: (i) a main text compliant with the Turkish Code of Obligations and explaining the order of precedence, (ii) an updatable and auditable code referencing this text, and (iii) a proof infrastructure strengthened with secure e-signatures, KEP (Registered Electronic Mail), timestamps, and version-hash lists. This framework ensures the secure implementation of smart contracts within the Turkish legal system, while respecting both freedom of contract and technical automation.