Extraordinary Termination

Also known as: Termination for Cause, Termination for Just Cause, Immediate Termination, Olağanüstü Fesih, Haklı Sebeple Fesih

Author Ali Gül

In short

Termination of a continuing contract with effect for the future, without regard to its term or notice period, where there is just cause making its continuation intolerable for one party.

Extraordinary termination is an exception to the ordinary termination rules for continuing contracts. If continuing the contract has become intolerable for one party, that party may end it without regard to the term or notice period. Termination takes effect for the future; performances up to that point remain valid.

What Is Just Cause?

Situations in which, in good faith, the terminating party cannot be expected to continue the contract. Examples:

Serious or repeated breaches by the other party
Conduct destroying trust (e.g. secret collaboration with a competitor, disclosure of trade secrets)
Persistent non-payment
The other party’s bankruptcy or serious loss of solvency

Statutory Rules

General: Termination for the debtor’s default in continuing contracts where performance has begun (TCO Article 126).
Leases: Termination for important reasons making continuation intolerable (TCO Article 331).
Agency: Termination for just cause at any time, even for fixed-term contracts (TCC Article 121); see Agency Agreement.
Employment: Immediate termination for statutory just causes; see Termination for Just Cause.
Unregulated contracts: In distribution, franchise and similar continuing contracts, the Court of Cassation recognises termination for just cause as a general principle.

Contract Drafting

Commercial contracts should list grounds for termination for cause, provide a cure period and set the form of termination notices. Between merchants, termination notices are sent through a notary, by registered letter, telegram or KEP with a secure electronic signature (TCC Article 18(3)).

Consequences of Wrongful Termination

If no just cause existed, the termination is treated as ignoring the ordinary notice period or term, and the terminating party may be liable for the other party’s loss. For distributors and agents, a goodwill indemnity may also arise.

Frequently Asked Questions

Can a fixed-term contract be terminated before it expires?

Yes, if there is just cause. In continuing contracts, termination without waiting for the end of the term is possible where continuation cannot be expected of a party in good faith. Without just cause, early termination gives rise to liability for damages.

Who must prove just cause?

The terminating party must prove that termination was based on just cause. Stating the reason clearly in the notice and keeping earlier warnings, correspondence and records is therefore important.

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