Default in Turkish Law: When Does a Debtor Fall Into Default?

Default means a debt is not paid on time. Its legal meaning is more than mere delay, however. Default triggers interest and additional liabilities.

When does default begin?

Under Art. 117 of the Turkish Code of Obligations (TBK):

• Due debt: The debt has become payable but has no fixed date. The debtor falls into default when the creditor sends a reminder.
• Debt with a due date: If the date of performance is fixed by contract, default occurs when the date passes, without a reminder.
• Reminder with a period: If the contract provides performance a certain period after a reminder, default occurs at the end of that period.

Consequences of default

Consequence	Explanation
Late (default) interest	The debtor pays interest for the period of delay
Additional damage	If the loss exceeds the interest, the creditor can claim the difference by proving it
Risk	The debtor may be liable even for accidental loss occurring during default, although not at fault
Termination and withdrawal	In contracts with mutual obligations, a right to withdraw may arise after a reasonable period is set

How is interest calculated?

If a rate is set in the contract, that rate applies. Otherwise statutory interest applies. In commercial matters, advance interest applies.

How Denova can help

Setting the default date and interest of your receivable correctly keeps the amount beyond dispute in enforcement proceedings and in court. In our Legal Advisory we plan the reminder, enforcement and litigation steps together.