What are General Terms and Conditions? Legal Nature, Control, and Impact on Contracts

Entrance

The increasing complexity of economic and commercial relationships today has led to significant changes in the way contracts are drafted. Particularly in banking, insurance, transportation, electronic services, subscription relationships, and large-scale commercial activities, it is often impossible to prepare each contract through individual negotiations between the parties. Therefore, in practice, many contracts are established using pre-prepared standard clauses.

Contract terms and conditions are defined as provisions prepared in advance by one party for use in numerous similar contracts in the future, and accepted by the other party without the possibility of interfering with their content

While general terms and conditions provide speed and practicality in contractual relationships, they can also bring certain risks for the other party to the contract. In particular, the economically stronger party may unilaterally determine the content of the contract and include provisions that restrict the rights of the other party. Therefore, instead of completely prohibiting general terms and conditions, legal systems attempt to ensure contractual balance by providing certain control mechanisms.

In Turkish law, general terms and conditions of transactions in Articles 20 to 25 of the Turkish Code of Obligations No. 6098. The main purpose of these regulations is to protect the principle of freedom of contract while preventing one party from causing disproportionate consequences to the other party through pre-prepared contract provisions.

The Concept of General Terms and Conditions

General terms and conditions are provisions prepared in advance by one party to a contract, for use in numerous similar contracts in the future, and included in the contract without negotiation with the other party.

According to Article 20 of the Turkish Code of Obligations;

"General terms and conditions are the contractual provisions that the drafter prepares unilaterally and presents to the other party at the time of conclusion of a contract, with the intention of using them in numerous similar contracts in the future."

Based on this definition, general terms and conditions of a transaction have some fundamental characteristics.

Firstly, these provisions must be prepared before the contract is concluded. In other words, provisions specifically created as a result of mutual negotiations between the parties do not constitute general terms and conditions of a contract.

Secondly, these provisions should be prepared for use in numerous similar contracts that may be concluded in the future. Specific provisions prepared by a person for only a single contract are not considered general terms and conditions of business.

Finally, the other party must have had no genuine opportunity to negotiate these terms. If the parties have mutually agreed to change a provision, that provision ceases to be a general condition of transaction and takes on the character of an individual contract provision.

Elements of General Terms and Conditions

For a contractual provision to be considered a general condition of transaction, certain elements must be present together.

Being Prepared in Advance

One of the most important characteristics of general terms and conditions is that they are prepared before the contract is concluded.

For example, standard terms in a loan agreement prepared by a bank may be considered general terms and conditions because they are prepared in advance and offered to a large number of customers by the bank.

Conversely, contract terms specifically prepared and mutually agreed upon by two individuals for the sale of a particular property are not considered general terms and conditions of a transaction.

Intended Use in Numerous Contracts

Another element of general terms and conditions is that these provisions are designed for use in numerous similar contracts.

What matters here is not how many contracts it was actually used in, but whether such an intention existed when it was drafted.

For example, standard terms and conditions that a company uses in all its contracts with customers can be considered general terms and conditions of business.

Unilateral Preparation

General terms and conditions are usually drafted by the stronger party to the contract. The drafting party determines the content of the contract in advance and presents it to the other party as a ready-made text.

This situation is particularly common in contracts with banks, insurance companies, internet service providers, large businesses, and professional organizations.

Not Negotiated

One of the most important characteristics of general terms and conditions is that the other party has no real opportunity to negotiate these terms.

If the other party is obliged to accept the contract presented to them as is, or if they have no possibility of changing the content of the terms, these terms are considered general terms and conditions of a transaction.

However, terms that the parties have actually negotiated and agreed upon do not fall under the scope of general terms and conditions.

Inclusion of General Terms and Conditions in the Contract

It is not sufficient for a provision to simply be considered a general condition of transaction. Certain conditions must be met for these provisions to be deemed incorporated into the contract. The Turkish Code of Obligations requires that the other party to the contract be informed of the general conditions of transaction and have the opportunity to accept them.

The party preparing the general terms and conditions must present these terms to the other party in a clear and understandable manner. The other party's signing or electronic acceptance of the contract does not, in any case, guarantee the validity of all general terms and conditions. The crucial point is whether the other party had access to these terms and conditions.

For example, if a bank provides its customers with standard terms included in a loan agreement, the customer should be given the opportunity to review these terms. Terms included in the agreement that are not made available to the other party, or that the other party cannot possibly learn, may be omitted from the agreement.

The purpose of this regulation is to prevent the abuse of the principle of freedom of contract. This is because, in general terms and conditions of a contract, one party is often in a stronger economic and legal position. To protect the weaker party, the legislator has made the inclusion of general terms and conditions in contracts subject to certain conditions.

General Terms and Conditions are deemed not to have been written

One of the most important sanctions regarding general terms and conditions of transactions in the Turkish Code of Obligations is that some provisions are deemed to be unwritten.

According to the law, if general terms and conditions that are contrary to the interests of the other party are included in a contract without the drafting party explicitly informing the other party of their existence or providing them with the opportunity to learn about and accept them, those provisions shall be deemed not to have been written into the contract.

The sanction of being deemed unwritten produces a different legal consequence than nullity. If a provision is deemed unwritten, that provision is considered never to have been part of the contract. However, the other provisions of the contract generally remain valid.

For example, if an internet subscription contract contains a standard clause regarding additional fees charged without the consumer's knowledge, and this clause is not clearly presented to the consumer, it may not be considered part of the contract.

This sanction prevents the party drafting the contract from unilaterally including clauses with serious consequences without the knowledge of the other party.

The Principle of Clarity and Understandability in General Terms and Conditions

For general terms and conditions to be validly applicable, they must be clear and understandable. The other party to the contract must be able to reasonably assess the meaning of the terms presented to them.

General terms and conditions that are complex, ambiguous, or open to different interpretations can create legal security issues for the other party to the contract.

Therefore, in the general terms and conditions;

• Using clear language,
• Technical terms should be explained as clearly as possible
• Clearly defining the rights and obligations of the parties,
• Avoiding vague expressions,

is required.

The principle of clarity does not only mean that the contract must be legible. It also means that the economic and legal consequences of the contract must be understandable to the other party.

This principle is particularly important in consumer contracts, as consumers often lack the opportunity to thoroughly examine lengthy and technical contract texts. Therefore, provisions that could be detrimental to the consumer must be clearly defined.

Content Control in General Terms and Conditions

Content review in general terms and conditions involves examining whether the contract provisions comply with the principle of good faith.

According to Article 25 of the Turkish Code of Obligations, general terms and conditions of transactions cannot contain provisions that are contrary to the principles of good faith and are detrimental to or worsen the situation of the other party.

The aim of this regulation is to prevent the party drafting the contract from excessively restricting the rights of the other party by using its economic power.

The following factors are considered during content moderation:

• Whether the ruling upsets the balance between the parties,
• Whether it has disproportionately restricted the rights of the other party,
• Whether it creates an excessive advantage in favor of the organizing party,
• Whether it is compatible with the principle of honesty.

For example, clauses in a contract that stipulate one party assumes no responsibility while the other party bears all the risks can pose problems in terms of content moderation.

Courts, in evaluating general terms and conditions of a contract, consider not only the appearance of the contract but also its actual effect on the parties.

The Place of General Terms and Conditions in Consumer Contracts

General terms and conditions are frequently encountered, especially in consumer contracts. Bank contracts, insurance policies, subscription contracts, e-commerce contracts, and warranty terms often contain pre-prepared standard provisions.

Consumers are often forced to accept these contracts without having the opportunity to modify or negotiate them. Therefore, consumer law also includes specific protection mechanisms regarding general terms and conditions of transactions.

Under Law No. 6502 on Consumer Protection, unfair terms in consumer contracts are also subject to scrutiny. Contract provisions that create an imbalance against the consumer and violate the principle of good faith may be deemed invalid.

These regulations aim to strike a balance between the consumer's freedom of contract and their need for protection.

General Terms and Conditions in Supreme Court Practice

The fundamental approach in Supreme Court rulings regarding general terms and conditions of transactions is that freedom of contract is not unlimited and that a balance between the parties must be maintained.

When evaluating whether a provision constitutes a general condition of a contract, the Supreme Court primarily considers whether the provision was prepared in advance, its intended use in numerous contracts, and whether it was negotiated with the other party.

Furthermore, in the jurisprudence of the Supreme Court, it is accepted that merely signing the contract by the other party is not always sufficient. What is important is that the other party had the opportunity to genuinely know the terms of the contract.

The review of general terms and conditions of transactions is frequently a topic of discussion, particularly in banking contracts, rental agreements, insurance contracts, and consumer transactions.

The Supreme Court's approach on this matter is that the economically stronger party must act in accordance with the principles of good faith when exercising their authority to draft a contract.

Conclusion

General terms and conditions are an important legal tool widely used in modern contractual relationships and contribute to the speed of commercial life. However, the unilateral preparation of these conditions in advance can create certain risks for the other party to the contract.

Instead of completely prohibiting general terms and conditions, the Turkish Code of Obligations subjects them to various control mechanisms. The aim is to maintain the balance between the parties in the contract through conditions of inclusion, the sanction of being deemed unwritten, the principle of clarity, and content control.

Therefore, adhering to legal regulations during the preparation and implementation of general terms and conditions is of great importance for the validity of contracts and the protection of the parties' rights.