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LAW 519 BUSINESS LAW
PROF.DR.HURIYE KUBILAY
2013 SPRING SEMESTER
SUBJECTS
 Fundamental Concepts of Obligations Law
 Contractual Obligations (Establishment of a
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contract)
Contractual Obligations (Requirements of a
contract)
Various kinds of contracts
Law of Business Enterprise
Law of Business Enterprise
Mid-term Exam
SUBJECTS
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General Principles of Company Law
Joint Stock Corporations
Joint Stock Corporations
Limited Liability Company
Negotiable Instruments
Unfair Competition
Protection of Trade Marks
Review
Review
WHAT IS LAW ?
Law is a system of reason, a set of deductions
from principles of ethics, morals, or justice.
LAW
 Law consists of a set of universal moral
principles in accordance with nature.
 The law as fundamentally a vehicle for the
protection of individual rights, the attainment
of justice, or economic, politic, and sexual
equality.
TYPES OF LAW
- SUBSTANTIVE LAW (MADDİ
HUKUK)
- PROCEDURAL LAW (USUL
HUKUKU)
Substantive Law
Substantive Law deals with the different
ways people interact. Law adressed to
actions and relationships among people is
substantive law.
SUBSTANTIVE LAW
 Civil Law
 Commercial Law
 Constitutional Law
 Administrative Law
Procedural Law / Adjective
Law
 Procedural Law / Adjective Law Law that
structures government by laying down
procedures on how it must act –especially
that which relates to the courts thremselvesis known as procedural law. Procedural Law
shapes the legal-judicial process: how
lawsuits begin and move through the courts.
PROCEDURE LAW

Civil Procedure Law
 Criminal Procedure Law
 Administrative Procedure Law
PROCEDURAL LAW
 Civil Procedure Law (Hukuk Muhakemeleri
Kanunu) Civil Procedure Act, 6100 was
entered into force in 01 October 2011.
 Criminal Procedure Law (Ceza Muhakemeleri
Kanunu)
LAW
Public Law – Private Law
Public Law
 –for example constitutional law,
administrative law- deals with relations
between government and private citizens and
organizations.
Private Law

Private Law which is the set of laws that
spell out the duties, obligations and
responsibilities that individuals and
organizations owe to each other (Tort Law,
Contract Law, Property Law, Partnership and
Corporation Law)
LAW CLASSIFIED BY GOVERNMENTAL
BRANCH CREATING IT
 Statutes A law enacted by a legislature is
called a statute. It is written and published in
various forms.
 Regulations Laws emanating from the
executive branch –the source of
administrative law- are called regulations or
rules; they too are written and published.
 Statutes are enacted by legislative body.
 Statutory decrees and regulations are
entered into force by executive body.
LEGISLATION
 The stereotypical source of law in
contemporary legal systems is the statute
enacted by a legislative body that seeks to
introduce new rules, or to amend old ones –
generally in the name of reform, progress, or
the alleged improvement of our lives.
HIERARCHICAL ORDER
 The Constitution
 Statutes, International conventions, statutory
decrees
 Regulations
 By-Laws
MAIN SOURCES OF BUSINESS LAW
- TURKISH CODE OF
OBLIGATIONS
- TURKISH COMMERCIAL CODE
 Ordinary legal transactions are subject to
Code of Obligation
 Commercial legal transactions are subject to
Turkish Commercial Code
LEGAL SYSTEMS:
CIVIL LAW and COMMON LAW
The system of codified law that obtains in
most of Europe, South America, and
elsewhere is known as civil law,
in contrast to the common law system that
applies in England, former British colonies,
the United States, and most of Canada.
CODES OF OBLIGATIONS
 Code of Obligations, 818 (1926)
 Turkish Code of Obligations ( Enter into force:
1th July 2012)
OBLIGATIONS ARISE FROM THREE
SOURCES
 Contracts
 Tortious Acts
 Unjust/Unjustifiable enrichment
CONTRACT
Contract is a legal relation between two parties
formed by the concurring declarations of their wills.
CONTRACTS ARE MADE EITHER TO
CREATE AN OBLIGATION OR
AMEND OR TERMINATE AN
EXISTING OBLIGATION
A CONTRACT SHALL BE
CONCLUDED WITH THE MUTUAL
AND HARMONIOUS ASSENTS OF
THE TWO PARTIES.
DECLARATION OF WILL OF A
PARTY THAT GIVES RISE TO A
CONTRACT IS CALLED THE OFFER
AND IT CONSTITUTES THE
INITIAL MOVE. A CONTRACT IS
CONCLUDED WHEN THE OFFER
MADE BY ONE PARTY (THE
OFFERER) IS ACCEPTED BY THE
OTHER PARTY.
OFFER
An offer is a declaration of
will (intention) by the
offerer, communicated to the
offeree, whereby he declares
his willingness to enter
into a contract with a
specified content and under
certain terms.
Offer, as a rule, is made to
a specific person. But, it
is also possible to direct
an offer to persons whose
identity is not yet
specified, that is to say to
the general public.
OFFER MAY BE MANIFEST
(EXPRESSIVE) OR IMPLIED.
INVITATION TO TREAT/OFFER
A declaration, carries
merely the purpose of
attracting the attention of
the interested people and
inviting them to make offers
in case they care to enter
into a contractual relation.
THE BINDING EFFECT OF THE
OFFER
Offer is the initial step
towards creating a
contractual relation and it
grants the offeree right to
conclude the contract by
making an acceptance.
 Offer communicated to an offeree who was
present
 Offer communicated between parties not
present (Inter Absentes)
OFFER COMMUNICATED TO AN
OFFEREE WHO WAS PRESENT
 The term 'between present parties' means that both
the offeror and the offeree were negotiating face to
face, together at the same time and at the same
place. Communications conducted through
telephone is deemed as communications entered
into between parties who are present.
 An offer that is made to an offeree who is present
and without allowing any time limit for acceptance,
shall expire if it were not accepted immediately.
OFFER COMMUNICATED BETWEEN
PARTIES NOT PRESENT (INTER
ABSENTES)
 In case the offerer has indicated a period of
time for the acceptance, he must wait until the
expiration of that period.
REVOCATION OF THE OFFER
 The offeror may be relieved from being bound
by the offer by sending a declaration of
revocation to the offeree which should reach
him either before the offer does or at the latest
simultaneously with the offer.
ACCEPTANCE
 The acceptance reflects the definite will of the
other party (the offeree) to enter into the
proposed contractual relationship, based on the
terms and conditions contained in the offer.
 The acceptance must be in full accord with the
offer and consequently a modification of the
terms and conditions of the offer is not deemed as
an acceptance but considered to be a counteroffer, which may lead to the conclusion of a
contract only if it is, in his turn, accepted by the
original offeror.
CLASSIFICATION OF CONTRACTS
 Unilateral contracts
 Bilateral (synallagmatic) contracts
 Perfect Bilateral (Synallagmatic) contracts
(Contracts of sale, rent or carriage)
 Imperfect Bilateral (Synallagmatic) contracts
UNILATERAL CONTRACTS
When the promise of a gift is accepted by the
promisee, there will be a unilateral gift
contract.
IMPERFECT BILATERAL CONTRACT
For example, an agency contract without
remuneration or a loan contract without
interest or loan for use. In the latter, the
borrower of the loan has only the obligation
to return what he has borrowed, whereas the
other party has no counter obligation to
fullfill.
PERFECT BILATERAL CONTRACTS
Perfect bilateral contract is a contract where
the parties exchange their promises. In other
terms, a bilateral contract or a synallagmatic
(reciprocal) contract is a contract in which
both parties undertake reciprocal duties
which are enforceable by law. For example, in
the case of a sales contract related to a real
property (land), the seller promises to convey
the title of the land and the buyer promises to
pay the sale price.These are mutual promises
and principal obligations of the parties.
PERFORMANCE
 Performance of a contract means the complete
and proper fulfilment of the obligations in
accordance with the terms and conditions
contained in the contract.
VALIDITY CONDITIONS OF A CONTRACT
- CONTRACTUAL CAPACITY
- FORM OF THE CONTRACT
- LEGALITY OF THE SUBJECT MATTER
CONTRACTUAL CAPACITY
TO ENTER INTO A CONTRACT
Capacity to act means an ability to acquire rights
and incur liabilities (TCC. Art.9).
Capacity to act should be distinquished from the
capacity to enjoy civil rights (TCC. Art.8).
Under Turkish Law, every person, even an unborn
child is subject to enjoy civil rights; provided that
he’s born alive, but not every person should
necessarily have the capacity to act.
DEGREES OF CAPACITY TO ACT
 Full capacity
 Full incapacity
 Limited incapacity
 Limited capacity
FULL CAPACITY
 Capacity to make fair judgements. This means that a person has
sufficient mental capacity to foresee and to understand the nature,
importance and consequences of his transaction (TCC Art.13).
 Majority. Turkish Law has fixed the age of majority at eighteen
years. All persons under this age are known minors. Majority by
marriage : Marriage confers majority (TCC Art.11). Majority by
declaration of court: A minor who has completed 15th year, upon
his application and approval of his parents may be declared by the
judge to be of full age (TCC Art.12).
 Negative condition : Not to be interdicted. The interdiction is to
remove, totally or partially, a person’s capacity to act because of his
thriftlessness, drunkenness, and misuse of administration or
imprisonment for more than one year (TCC Art.405-408).
FULL INCAPACITY
The contract entered into by a mentally
disordered person is null and void (TCC
Art.15). A person deprived from power of will,
cannot create a contract. A contract entered
into by an incapable person cannot be
converted into a valid contract even with the
approval of his/her legal representative.
Turkish Law provides some
exceptions to the voidity of a
transaction
:
 When equity requires that an incapable person be liable to
compensate for damages that he has caused (TCO Art.54).
 Marriage of a person deprived at the time of wedding of the
ability to make fair judgement yields all legal consequences
of a valid marriage until the declaration of nullity by the
court. This exception is recognized in order to protect the
civil status of the child born until the declaration of nullity of
the marriage.
 A lawsuit based on an unjust enrichment can be brought
against an incompetent person.
 An incompetent person cannot allege the nullity of a
contract against the rules related to good faith. For example,
a mentally disordered employer should not be entitled to
claim the recovery of the payments that he has made to his
employee.
LIMITED INCAPACITY
Minors and interdicted persons have limited
incapacity to act if they are subject to make fair
judgement. They need the consent of approval of
their legal representative (parents or legally
appointed guardian) (TCC, Art.16).
The contract entered into by a person of limited
incapacity is not bound while the other party is
bound with the contract. The validity of the
contract is in suspension, until ratification or
refusal of ratification of the legal representative.
A gratuitous contract (without consideration),
where the minor does not incur liability, can
be validly entered into by a minor without
the consent of his legal representative. For
example, a minor can accept a gift without
the consent of his legal representative
because, in such a case, he/she merely
acquires an advantage without incurring
liabilities.
The person having limited incapacity is liable
for the damages given by an unlawful act
(tortious liability)
CLASSIFICATION OF CONTRACTS
ACCORDING TO THE “CAUSA”
 Causal contracts
 Abstract contracts
CAUSAL CONTRACTS
Every obligation should have a cause behind
it.This cause may be causa credendi, causa
solvendi or causa donandi.The validity of a
contract depends on the “validity of the
cause”. It means that the contract is valid
when the parties agree on a valid legal
ground.
Under Turkish Law, the transfer of immovable is
always admitted as causal.
The performance of a contract creating an
obligation often needs another transaction,
which is called “act of disposal”, an act that
results in a decrease of assets. For example, a
contract of sale creates an obligation the
transfer of the property sold to the buyer. The
performance takes place when the property
sold is delivered to the buyer. The delivery is
an act of disposal, an act that results in a
decrease of the assets of the debtor (seller).
ABSTRACT CONTRACTS
A contract may be effective even if the cause is
not valid.
This theory has been evolved to maintain the
validity of a contract and to ensure the
commercial security in business practice.
Under the “abstract transaction theory”,
transfer of title will be valid even the contract
creating the obligation of transfer is void.
THE SUBJECT MATTER
OF THE CONTRACT
The subject matter of a contract is a promise/an
undertaking for a promise.
The creditor may ask his debtor to give something,
to do an act or to refrain from doing a specific
act. Unless prohibited by law, the subject of the
promise may be a tangible object, something
that can be touched or that occupies a space,
such as movables or real property or an
intangible objectsuch as aright of credit or an
intellectual and industrial right such as patents
and inventions.
VARIOUS KINDS OF CONTRACTS
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Sale contract
Hiring contract
Guarantee contract
Barter contract
Service contract/The work contract
Lend contract
Brokerage contract
The agency contract
The contract of carriage
TORTS
A person causing damage to another person
intentionally or by negligence by an act
against the law shall be obliged to
compensate the damage. A person causing
damage to another person by an intentional
act against the morals shall equally be
obliged to compensate it.
TORT
The term “tort” (unpermitted actions) refers
to a violation of a civil law rule of conduct
causing injury to another person. The person
whose unlawful conduct results injury to the
victim is defined as “tortfeasor”. He is the one
who commits a tortious act.
 Any person who is deprived of his individual right
in an unlawful manner can demand for the
tortfeasor reperation of his damages. The victim
(plaintiff) is the party who has sustained an injury
to his person or property. He can bring a tort
action against the tortfeasor (defendant) to
recieve compensation. The goal of Tort Law is to
assign financial liability to the tortfeasor for his
tortious conduct that has resulted in injury or lost
to an individual person or his property.
UNJUST ENRICHMENT
A person who acquires something at the
expense of another without any legal ground
shall be required to return it.
UNJUST ENRICHMENT
Unjust enrichment is the gain of a person
from the property (assets) of another without
having justifiable grounds. An unjust
enrichment creates the duty to return. Any
person, who has, in an unjustifiable manner,
becomes richer by receiving a gain out of
property of another, is bound to return.