Distance Contracts in Consumer Turkish Law

Regulation on Distance Contracts (published in the Official Gazette dated November 27, 2014 and numbered 29188), which has been prepared on the basis of the EU Directive numbered 2011/83/EU and which is bringing a new legal framework to the distance contracts (an important matter in consumer law), has entered into force on February 27, 2015. For more information, you may find below the detailed article prepared by our law firm in respect to this matter.
1. Introduction
After entry into force of the consumer legal framework in Turkey and its subsequent active development, laws and regulations pertaining to the consumer law has also developed in Turkey and been subject to various amendments. Firstly, the main law related to consumers and consumption, the Law No. 4077 on Protection of the Consumers (published in the Official Gazette dated March 8, 1995 and numbered 22221) (“Former Consumer Code”), has been replaced with the Law No. 6502 on Protection of the Consumers (published in the Official Gazette dated November 28, 2013 and numbered 28835) (“Consumer Code”).

In line with these changes, new requirements have been necessitated also from standpoint of distance contracts, whose importance has been constantly increasing as a result of improvement of communication possibilities and widespread use of internet, as well as synchronization of marketing techniques with such improvements. The Former Consumer Code regulated the distance contracts just with general framework provisions; however, necessity of detailed regulation initially brought the entry into force of the Regulation on Procedures and Principles on Implementation of Distance Contracts (published in the Official Gazette dated June 13, 2003 and numbered 25137) and subsequently the Regulation on Distance Contracts (“Former Regulation”) (published in the Official Gazette dated March 6, 2011 and numbered 27866). Together with entry into force of the Consumer Code, it was provided under the Consumer Code that the distance contracts would again be regulated with a regulation and the distance contracts are regulated with the up-to-date Distance Contracts Regulation (published in the Official Gazette dated November 27, 2014 and numbered 29188) (“Regulation”) in accordance with Article 48/6 of the Consumer Code. The Regulation has been drafted on the basis of the Directive of the European Parliament and of the Council numbered 2011/83/EU (“EU Directive”). However, despite being almost a copy of the EU Directive on many points, the Regulation has certain parts or additional content which partially differ from the EU Directive. Although the Regulation intends to harmonize Turkish consumer law with the EU law and generally manages to do so, it also appears to have some points where it does not really reflect the intended result as a result of erroneous translation. The Regulation has abrogated the Former Regulation and will be entering into force on February 27, 2014.

The references to the Former Consumer Code will be deemed to be done to the Consumer Code pursuant to Article 86 of the Consumer Code. Accordingly, obligations brought in respect to the distance contracts under the legal framework of other fields will still be valid and in force. For example, the provisions brought in respect to the form and delivery of the invoices in distance contract sales under Section 4 of the General Communiqué No. 385 of the Code of Tax Procedure (published in the Official Gazette dated August 1, 2008 and numbered 26954) shall be valid also during the terms of validity of the Consumer Code and Regulation.

2. Distance Contracts

General provisions related to the distance contracts have been set forth under Article 48 of the Consumer Code. As per Article 48/1 of the Consumer Code and Article 4/1(e) of the Regulation, a distance contract is defined as a “contract concluded under a system established for distance marketing of goods or services without the simultaneous physical presence of the trader or provider and the consumer, with the use of distance communication tools up to and including the time at which the contract is concluded between the parties”.

As per Article 2 of the Regulation, certain exceptions have been brought to the scope of the distance contracts regulated by the Regulation. These exceptions have been set forth in a more inclusive manner in comparison with the Former Regulation. Accordingly, the Regulation provisions shall not be applicable to the contracts related to (i) financial services, (ii) sales concluded by means of automatic machines, (iii) telecommunications operators through public payphones and use of such phones, (iv) services relating to betting, sweepstakes and lotteries and similar games of chance, (v) creation, transfer or acquisition of immovable property or of rights in immovable property, (vi) residential leases, (vii) package tours, (viii) timeshare properties, timeshare vacation, long-term holiday services and resale and exchange of these, (ix) supply of foodstuffs, beverages or other goods intended for daily consumption to consumer's residence or workplace on supplier's regular rounds of delivery, (x) passenger transport services (with certain exceptions), (xi) installation, maintenance and repair of assets, (xii) social housing, social services for support of the families and persons such as care of children, elder or sick persons. The grounds for existence of the above-mentioned exceptions are generally: (i) presence of similar exceptions under the EU Directive, (ii) exclusive regulation of the exceptional consumer contracts or distance contracts under the Consumer Code (for example, distance contracts related to financial services, timeshare vacation and long-term holiday services and package tours are regulated under Articles 49, 50 and 51 of the Consumer Code respectively, in a manner differing from Article 48 of the Consumer Code), (iii) exclusive regulation of the exceptional consumer contracts under various specific legislation (e.g., betting, sweep staking, lottery and similar games of chance are regulated under Licensing of Games of Change, Regulation and Inspection of Activities to be Licensed (published in the Official Gazette dated October 15, 2008 and numbered 27025)), or (iv) the lawmaker seeing no necessity for application of distance contract rules to certain exceptional consumer contracts due to the subject and characteristic of the goods or services provided (e.g., immovable property, daily consumption materials, installation/maintenance/repair, etc.).

In respect to the distance contracts in general, certain exceptions set forth under the Regulation or certain provisions regulated under the specific legislation shall also be taken into account. For example, Article 9 of the Regulation on Activities to be Evaluated Under Insurance Services, on Insurance Contacts Concluded in Favor of the Consumer and on Distance Insurance Contracts (published in the Official Gazette dated April 25, 2014 and numbered 28982) (“Insurance Contract Regulation”) brings additional provisions in respect to the distance contracts to be concluded in the field of insurance and reinsurance, which are accepted under the umbrella of financial services (therefore the Regulation being inapplicable) as per Article 49 of the Consumer Code. Although the distance contracts regarding passenger carriage services are not included in the scope of the Regulation, the provisions of the Regulation on additional payments, fees for phone use and certain information obligations have been regulated as valid in accordance with the exception set forth under Article 2 of the Regulation.

3. General Provisions
Clauses between Article 48/2 and 48/5 of the Consumer Code regulate the general provisions in respect to the distance contracts. Article 48/2 is on prior information obligation, Article 48/3 is on delivery, Article 48/4 is on right of withdrawal, and Article 48/5 is on preservation of information. The Regulation has been prepared in light and frame of the general provisions above and elaborates such general provisions. Below, each and every one of the general provisions will be examined as set forth under the Regulation. 4. Prior Information Obligation Prior information obligation is the obligation of the seller/provider in respect prior information of the consumer. Such obligation is regulated in between Articles 5 to 8 of the Regulation. In these articles, prior information obligation has been categorized with special provisions related to (i) content, (ii) method and (iii) confirmation of the information. By this, in comparison and contrast with the Former Regulation, (i) the content of prior information obligation has been made much more extensive, (ii) provisions related to the method of information have been brought and (iii) rules on confirmation have been amended. In case of any disputes, the burden of proof rests on the seller/provider whether the prior information has been made or not.

a. Content
Prior information obligation of the seller/provider has been made subject to certain statutory requirements in respect to the content of information under Article 5 of the Regulation. As per this article, the consumer shall be informed in respect to whole of the below-referred content before conclusion of a distance contract or acceptance of a proposal (offer) directed towards such conclusion. As per Article 5/2 of the Regulation, such content has been referred to as an inseparable and non-amendable (unless the contrary is decided) part of the distance contract. Meanwhile the scope of such content was designated as 8 short clauses in the Former Regulation, it has been increased to 13 detailed clauses as listed below, under Article 5/1(a)-(k) of the Regulation (hereinafter such clauses are referred to as the “Content”):

(a) main characteristics of the goods or services which are the subject matter of the contract, (b) name or trade name of the seller/provider and Turkish Central Registry Registration System (MERSİS) registration number, (c) full address, telephone number and similar communication information of seller/provider availing the consumer to contact them in a fast manner and if applicable, identity and address of the person/entity acting in the name or account of the seller/provider, (ç) if the seller/provider has a different contact information for consumer complaints than the one provided under clause (c), then information on such contact information, (d) total prices of the goods and services inclusive of taxes, or where the nature of the goods or services is such that the price cannot be calculated in advance, the manner in which the price is to be calculated, as well as where applicable, all freight, delivery expenses and similar additional expenses and the information that such expenses may be paid if they cannot be calculated in advance, (e) additional expense burden on the consumer in cases where the price for the use of means of distance communication cannot be calculated via the ordinary price tariff, (f) information regarding payment, delivery and performance and if any, undertakings in respect to these, as well as resolution methods of the seller/provider regarding complaints, (g) conditions, time period and procedure for use of the right of withdrawal, in cases which such right exists, as well as the information regarding the carrier designated by the seller for return (i.e. of goods) (ğ) information on full address, fax number or electronic mail to be used for service of the withdrawal notice (h) information that the consumer cannot use the right of withdrawal in cases which the right of withdrawal cannot be utilized pursuant to Article 15 (i.e. of the Regulation) or information about under which conditions the consumer would lose the right of withdrawal, (ı) where applicable, any deposits or other financial guarantees that should be paid or provided by the consumer upon request of the seller/provider, as well as conditions in respect to these, (i) where applicable, technical protection measures which may affect the functionality of the digital contents, (j) information about interoperability of digital content with hardware or software, provided that seller/provider is aware of or should reasonably be expected to be aware of such information, (k) information that the consumers may apply to the consumer courts or consumer arbitral committees in respect to any disputes.

If no prior information is provided in respect to the additional expenses set forth under subclause (d), there would be no more liabilities on consumer in relation to coverage of such expenses pursuant to Article 5/3 of the Regulation. Furthermore, it is obliged under Article 5/4 of the Regulation for the total price to be included on basis of each invoicing term in the indefinite contracts or definite term subscription contracts. Article 5/5 brings an exception for the scope of the Content for the distance contracts concluded through auctioning/reverse auctioning and avails for inclusion of identity of the bidding persons to the prior information content set forth under subclauses (b), (c) and (ç).

b. Method
In addition to the content requirements, Article 6 of the Regulation stipulates how the content of prior information shall be and how the prior information shall be made. Such form requirements in respect to the method were not provided for in the Former Regulation. Main relevant provision hereby is Article 6/1 of the Regulation, which sets forth that statutorily required content shall be transmitted “in writing or with permanent data storer by the seller or provider in an understandable language, a clear, simple and legible manner, at the least in 12-point font size and in accordance with the distance communication tool used” (the term “permanent data storer” has been defined in Article 4/1(c) of the Regulation and expresses the devices such as CD, DVD, memory card, e-mail, SMS). In ongoing articles of the Regulation, special provisions are delivered in connection with the distance communication tool used in presentation of the goods or services.

As per Article 6/2 of the Regulation, in the sales made through distance contracts via internet, there are further content requirements in addition to the Content. Accordingly, information in clauses (a), (d), (g) and (h) of the Content, delivery restrictions (e.g., geographical areas where the goods or services are not provided or delivery) and accepted payment tools (e.g., credit card, money transfer, etc.) shall be externally, separately and explicitly shown right before the payment obligation arises. In other words, right before the button for payment is clicked on the internet website, information on the goods’ or services’ characteristics and prices, right of withdrawal and return shall be explicitly included as set forth in the Content, as well as the payment tools and delivery restrictions.

In the distance contracts concluded through vocal communication (e.g. phone call), information set forth under clauses (a), (d), (g) and (h) of the Content shall be provided on the phone in a clear and understandable manner. Furthermore, information in such clauses and all the rest of the Content shall be sent in writing to the consumer at the latest by the delivery of the goods or performance of services. If there is sudden performance (i.e., performance during the vocal communication without any necessity of a further time period for delivery or performance), it is sufficient for the information set forth under clauses (a), (b), (d) and (h) to be provided to the consumer in a clear and understandable manner.

c. Confirmation
The scope of the prior information obligation is not limited solely with the content and method. As per Article 7 of the Regulation, the provider/seller has been obliged to provide for consumer’s confirmation of prior information duly made in accordance with the provisions on content and method. Otherwise, the distance contract would be deemed null and void. Through this, it was intended for the prior information procedure to move beyond a mere preparation of a standard text; it was intended to pave the way for verification that the information was read by the consumer; in other words, the obligation for obtaining consumer’s confirmation was brought in order to complete the prior information procedure. In contrast with the Former Regulation, the confirmation mechanism is regulated in a separate article and the consequences of the confirmation have been modified. Whereas in the Former Regulation it was not possible to execute the distance contract without the confirmation, a distance contract may be executed without confirmation under the Regulation; however, it would yet be deemed not concluded in abeyance.

d. Other Provisions
Apart from the prior information obligations the Regulation brings other obligations for disclosure and information to the seller/provider. These obligations, which were not existent in the Former Regulation, has been set forth under Article 8 of the Regulation. As per Article 8/1 of the Regulation, the seller/provider shall express in a clear and understandable manner what the order would mean for the consumer from a legal standpoint (in other words, the fact that the order would lay a payment obligation on the consumer). If such expression is not made, the consumer would not be bound with his/her order.

If the seller/provider contacts the consumer through phone, the seller/provider is obliged under Article 8/2 of the Regulation to disclose the identity (who the seller/provider is) and commercial purpose (purpose of the call, characteristics of the goods/services to be offered) in the very beginning of the relevant phone call.

5. Right of Withdrawal
a. The Right
Pursuant to Article 9/1 of the Regulation, the consumer is, as a rule, granted a right of withdrawal, which may be used within 14 days without any necessity for showing a reason or making a penalty clause payment. In face of this mandatory rule, provisions in the distance contracts to the contrary would not restrict the use of the right of withdrawal. Meanwhile the period for use of the right was stipulated as 7 days under the Former Regulation, it has been increased with the Regulation. Furthermore, the Regulation stipulates detailed provisions in respect to the right of withdrawal.

b. Duration
One of the critical questions is the starting point of the 14-day period. Provisions in respect to the starting point of the 14-day period are delivered between Articles 9/2 and 9/4 of the Regulation. In comparison with the Former Regulation, these provisions have been drafted in a manner including details regarding the contract types and establishment method of the distance contract. As per Article 9/2 of the Regulation, starting point is (i) the day the agreement is established in the contracts related to service performance and (ii) the day the goods are taken over in the contracts related to delivery of goods. Additional provisions concerning delivery of goods have also been stipulated in the Regulation. In distance contracts relating to delivery of goods, the consumers have been granted the right of withdrawal even in the period between establishment of the contract and delivery of goods. Under Article 9/4 of the Regulation, it has been clearly specified that delivery by the seller/provider to the carrier (e.g. cargo, courier, etc.) is not accepted as a delivery to the consumer. Furthermore, specific circumstances in delivery of goods have been taken into account under Article 9/3 of the Regulation when determining the starting point of the 14-day period. Accordingly, the starting point of the 14-day period is (i) delivery date of the last good in the goods which are subjects of a single order but separately delivered, (ii) delivery date of the last piece in multi-piece goods and (iii) delivery date of the first good in cases where a consistent delivery of goods takes place in a specified amount of time.

c. Omission of Information (Lacking Prior Information)
Should there be an omission of information (i.e. lacking prior information) in respect to the right of withdrawal and in violation of the prior information obligation, there brings Article 10 of the Regulation a different time period in favor of the consumer. In such case, the 14-day withdrawal period would be replaced by a time period 1 year at the most, which would be added to the usual 14-day period. Until the omitted information has been duly shared, the consumer is able to use his/her right of withdrawal within the aforesaid time period. If the omitted information has been duly shared within the aforesaid time period, then the 14-day period would restart to proceed from the date of such sharing. Burden of proof in proving that no information is omitted lays on the seller/provider. Whereas the 1-year period has been previously set forth as 3 months under the Former Regulation, it was extended under the Regulation in favor of the consumer.

d. Use of the Right
In comparison with the Former Regulation, use of the right of withdrawal has been further extended and the use of the right of withdrawal has been given a more detailed and formal legal framework. As per Article 11 of the Regulation, the notification of use of the right of withdrawal shall be duly made to the seller/provider on time and in writing or through permanent data storers. In use of the right, either the model withdrawal form (“Form”) provided in the annex of the Regulation or an unequivocal statement of the consumer may be utilized. If the seller/provider has provided an opportunity for the use of the right via its website, then it shall, pursuant to Article 11/2 of the Regulation, immediately transmit the confirmation that the withdrawal request has reached it. Pursuant to Article 11/3 of the Regulation, in distance contracts concluded via verbal communication (e.g., by phone), the Form shall be sent to the consumer at the latest by the delivery of goods or performance of services. The choice belongs to the consumer whether he/she would use the right of withdrawal through the Form or unequivocal statement. Under Article 11/4 of the Regulation, burden of proof regarding the right of withdrawal rests on the consumer, since the consumer is the user of the right of withdrawal.

Additionally, as per Article 14 of the Regulation, if the consumer duly withdraws the distance contract, the subsidiary agreements provided to the consumer in connection with the distance contract shall also terminate without requirement of any expenses, penalties and/or compensations. The exception for this is the tied loans regulated under Article 30 of the Consumer Law. If any third party is a party to the subsidiary agreements, the obligation to notify such third parties on termination of subsidiary agreements is on the seller/provider.

e. Liabilities of the Seller/Provider and Consumer in Case of Right of Withdrawal
The Regulation has provided certain obligations both on the seller/provider and the consumer should the right of withdrawal be duly used. Such obligations are much more detailed in comparison with the Former Regulation. The obligations of the seller/provider have been stipulated under Article 12 of the Regulation. These obligations are for (a) return of the payment, (b) payment return procedure and (c) return of the goods. The seller/provider has been obliged to: (i) return all the payments (including the expenses for delivery to the customer) collected from the consumer within 14 days (in contrast with the 10-day period set forth in the Former Regulation) from the date the withdrawal notice reaches the seller/provider, (ii) make all returns at one time in accordance with the payment vehicle used when the consumer was buying the goods/services (e.g., if the collection was made via credit card, the return should be to credit card, or if it was made via bank transfer, the return should be done the same way) and without creating any expense or liability for the consumer, (iii) in accordance with Article 5/1(g) of the Regulation, return the goods with the carrier set forth in the prior information or pay for the return expenses in case no carrier has been provided as a carrier in the prior information and if the carrier has no branches where the consumer resides, then to provide for takeover of the goods from the consumer.

Liabilities of the consumer is regulated under Article 13. Such liabilities are in relation to (a) return of the goods and (b) appropriate use. As per Article 13/1 of the Regulation, the consumer is obliged to return the goods to the seller/provider within 10 days (the starting point is not the date of service/delivery, but rather date of notification – i.e. the day the notification is directed) from the notification to the seller/provider of use of the right of withdrawal. What is regulated under Article 13/2 of the Regulation is the consumer’s liability arising from the changes and defects happening within the time period the goods remain in possession of the consumer during the withdrawal period. Accordingly, the consumer shall not be held liable from the changes and defects on the goods as long as he/she has used the goods in accordance with their functioning, technical properties and use instructions during the withdrawal period (i.e. implicitly meaning that he/she would be held liable otherwise).

f. Exceptions
As per Article 15 of the Regulation, consumer is not allowed to use the right of withdrawal in certain distance contracts unless the contrary is decided by the parties (of the distance contract). The number of such exceptional distance contracts are extended in comparison with the Former Regulation. Although these exceptional distance contracts are within scope of the Regulation, the provisions on the right of withdrawal are not applicable to them. They are listed in the Regulation below in 10 clauses (in a manner generally parallel with Article 16 of the EU Directive) and where necessary, examples have been given for better understanding of such exceptions: Distance contracts on (a) the supply of goods or services for which the price is dependent on fluctuations in the financial market which cannot be controlled by the seller/provider (e.g., distance contracts on certain petroleum, agriculture and mining products); (b) the supply of goods made to the consumer’s specifications or clearly personalized (e.g. distance contract executed on phone with a tailor in respect to sewing of trousers), (c) the supply of goods which are liable to deteriorate or expire rapidly (e.g., distance contracts on delivery of certain food products), (ç) the supply of goods with protective elements such as wrapping, band, seal and package, which are not suitable for return due to health or hygiene reasons and were unsealed after delivery (e.g., distance contracts on supply of certain beverages), (d) the supply of goods which are, after delivery, according to their nature, inseparably mixed with other items, (e) the supply of books, digital content or consumable computer materials with protective elements such as wrapping, band, seal and package which were unsealed after delivery, (f) the supply of periodicals such as newspapers or magazines with the exception of subscription contracts for the supply of such publications (e.g., ordering of a magazine for one time through a distance contract), (g) the provision of accommodation other than for residential purpose, transport of goods, car rental services, catering or services related to leisure activities for the purpose of entertainment or recreation if the contract provides for a specific date or period of performance, (ğ) services suddenly performed in electronical environment or on intangible assets suddenly delivered to the consumer; (h) services whose performance starts with consumer’s approval before the end of the time period for the right of withdrawal (i.e. time period for the use of such right).

6. Other Provisions
a. Performance and Delivery
Article 16 of the Regulation stipulates the (i) performance of the distance contracts and (ii) delivery of relevant goods if the distance contract is about a sale of goods. Bringing a more flexible and reasonable provision in comparison with the Former Regulation, Article 16/1 of the Regulation provides for the seller/provider to complete the performance of the contract within the undertaken period starting from the date when the consumer’s order reaches to the seller/provider. If the subjects of performance are goods, the performance time for the contract (in other words, delivery time) is 30 days at the most. In the Former Regulation, completion of every performance was subject to 30 days. This rule was of a nature constituting restrictions for provision of certain services through distance contracts. This restriction will be overcome with the new rule. Furthermore, arbitrary time extension by the seller/provider is prevented as a result of the abrogation of the right for 10-day time extension provided to the seller/provider under the Former Regulation.

If the distance contract is not performed or delivery not completed within the undertaken time period, consumer has the right to unilaterally terminate the agreement pursuant to Article 16/2 of the Regulation. If the consumer uses such right, then the seller/provider shall return all collected payments to the consumer (including the delivery expenses and statutory interest amount) as well as any documents possessed by it in respect to the distance contract, such as negotiable instruments or bills, which might render the consumer indebted.

The situation of impossibility has been regulated in Article 16/4 of the Regulation. If the obligation in respect to the goods or services has become impossible for any reason, the seller/provider shall notify this to the consumer in writing or with a permanent data storer within 3 days from the day he/she/it learns about it. In addition, all the payments made by the consumer shall be returned within 14 days along with the delivery expenses. However, the Regulation explicitly stipulates that “not having the goods in stock” does not constitute a situation of impossibility from the standpoint of distance contracts.

b. Damage Liability
Article 17 of the Regulation stipulates, for the first time, the liability of the seller/provider from delivery damages. Accordingly, the liability of the seller/provider from damages arising during the process of delivery has been restricted with the losses and damages taking place until the delivery of the goods to the consumer (or a third party to be determined by the consumer – e.g. another family member if the goods are delivered home). Additionally, an exception has been brought in respect to the damage liability. If the consumer requests for the goods to be delivered by another carrier (e.g. cargo, courier firm) rather than the one designated by the seller/provider, then the liability of the seller/provider terminates with delivery of the goods to the carrier. c. Fee for Phone Use Article 18 of the Regulation stipulates the fee for phone use. This article is important for the sellers/providers who provide support services or contact opportunity through phone, as well as consumers who receive services from these. This provision is quite pro-consumer. Previously, when such phone lines were being used by the consumers, there have been certain cases whereby the consumer has to pay a high price as a result of a high tariff rate operating per minute (e.g. 5 Turkish Liras per minute). However, in order to prevent such occurrences, the Regulation provided for such fees to be charged at the most over the basic (ordinary) phone tariff rate (i.e., can be a lower rate than the basic rate at the discretion of the seller/provider, but cannot be at a higher rate).

d. Additional Payments
As per Article 19 of the Regulation, requests for payment (by the seller/provider) of additional amounts apart from the main payment (i.e. primary contractual obligation) in respect to the distance contract has been subject to express consent of the consumer. This provision is a new one which was not existing in the Former Regulation. Even in cases whereby the choices consequently leading to additional payments have been provided as default options (e.g. particularly in online sales, certain additional services come up as automatically ticked in the screen and result in additions to the main price), the seller/provider shall immediately return the relevant additional payments should the consumer have made additional payments due to such options.

e. Storage of Information and Documents
As was in the Former Regulation, the seller/provider is obliged under Article 20/1 of the Regulation to store the information and documents regarding each and every transaction (e.g., informing, delivery, etc.) for a period of 3 years. Under Article 20/2 of the Regulation (a provision which was not present in the Former Regulation), those who act as intermediaries for establishment of distance contract through use of distance communication tools (e.g. phone) have been obliged to store the records for 3 years and such intermediaries have further been obliged to provide such records to relevant institutions and consumers upon request. As per Article 20/3 of the Regulation, burden of proof in respect to non-deficiency of intangible goods or performed services delivered to the consumer in the electronical environment rests on the seller/provider.