Rights And Obligations Of Brokers Under Turkish Law
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For decades, various third parties have been acting as intermediaries for the conclusion of contracts in maritime trade. These third parties may have different legal personalities and qualifications depending on the specific case and may mediate various contracts such as freight, ship sale and charter contracts. In this article, the legal nature, rights and obligations of brokers, who are among these third parties, under Turkish law will be analyzed.
LEGAL REGULATIONS ON BROKERS’ RIGHTS AND OBLIGATIONS OF BROKERS
There are no special regulations under Turkish law that directly determine the rights and obligations of maritime brokers. Therefore, which regulations maritime brokers are subject to and their relationship with similar legal concepts have been discussed in the doctrine. Although maritime brokerage has similarities with different legal concepts and institutions such as proxy, general brokerage, commercial representation or agency, it can be said that the most appropriate regulations for the nature of maritime brokerage are the regulations on general brokerage. The regulations on general brokerage are found under Articles 520 to 525 of the Turkish Code of Obligations numbered 6098 (“TCO“), and the TCO defines a brokerage agreement as “a contract in which the broker undertakes to prepare or mediate the possibility of the conclusion of a contract between the parties and is entitled to remuneration in the event of the conclusion of such contract”. This definition suggests the main obligation of the broker is to prepare the possibility of a contract between the parties or to mediate the conclusion of a contract, and the broker will be entitled to remuneration if this activity is successful.
Thus, it is possible to study the obligations of the broker under two main categories: “the obligation to engage in brokerage activities” and “the obligation of loyalty and care“. Although there are debates on the nature of the brokerage obligation, the predominant view in the doctrine is that it is not an obligation but a “charge”.In other words, if the broker fulfills the brokerage activities and the contract is concluded, the broker will be entitled to remuneration. However, the broker will not be considered acting in breach of the brokerage contract even if the contract has not been formed between the parties. The scope of this obligation includes the broker’s search for counterparties in accordance with the wishes of the business owner with whom the brokerage agreement is made, and brokering the conclusion of the agreement by recommending the appropriate counterparties to the business owner. Another obligation of the broker is to carry out all these works and transactions in a loyal and diligent manner. Article 520 of the TCO stipulates that the provisions of the TCO relating to proxy shall apply to brokerage agreements as a rule, and pursuant to this provision, the provisions of agency shall also apply to brokerage agreements to the extent that their qualifications are appropriate.
The basis of the broker’s obligation of loyalty and care is to perform the work undertaken by the broker under the rules of good faith. The primary requirement of this obligation is to act according to the instructions of the counterparty of the brokerage agreement, the business owner. It is possible to say that the scope of the broker’s duty of care is outlined by Article 506/III of the TCO, and the broker is obliged to create the most favorable conditions for the business owner, to warn the business owner, to protect the party to whom he intermediates and to act as a prudent broker.
The rights of the broker within the scope of these activities are primarily the right to remuneration and, if the parties have agreed, the right to claim expenses. The broker’s right to remuneration constitutes the principal performance obligation of the business owner, and it is regulated in Article 521 of the TCO that the broker is entitled to remuneration for the contracts for which the broker acts as an intermediary only if the contracts are concluded. In this case, if the contract is concluded, the broker will be entitled to the fee agreed between the broker and the business owner. The TCO also regulates the situation where the parties have not determined the fee. In such case, the tariff shall be applied and if there is no tariff, the custom shall be considered. In addition, if it is agreed in the broker’s contract that the expenses incurred will be paid to the broker, the expenses incurred by the broker will be paid even if the broker’s activity did not result in the conclusion of the contract. However, it is also possible for the broker to lose its rights regarding the fee and the expenses incurred, and this will occur if the broker acts in violation of the obligation undertaken by the broker and acts for the benefit of the other party or receives a promise of remuneration from the other party in violation of the rules of good faith.
Brokers have an important place in the maritime transportation industry as to bringing the parties together in the national and international arena and help performing the desired transportation business by concluding a contractual relationship between them. Maritime brokers have certain rights and obligations for the brokerage business they perform, and the provisions of the TCO regarding general brokerage will be applicable in determining these rights and obligations. In this context, brokers have the right to demand remuneration in return for their activities and, if the parties agree, the expenses they incur, as well as the obligation to fulfill the work they undertake by complying with the obligation of loyalty and diligence.
- ÜNSAL, Deniz Hukukunda Brokerlik, 2019
The preparation of contracts for ship chartering and sales (MOA and other related documents) to the clients within the scope of maritime trade...