US Contract Law Essentials for Turkish Companies 2026: Formation, Enforcement, and Dispute Resolution

US contract law is a product of common law tradition, supplemented by statutory frameworks like the Uniform Commercial Code (UCC) for goods transactions. It differs from Turkish contract law — which is based on the civil law tradition — in important ways that Turkish companies must understand when entering US commercial relationships.

For most service contracts, employment agreements, real estate transactions, and other non-goods contracts, US contract law is governed by common law — judge-made law developed through court decisions over centuries. Common law varies somewhat by state, but the core principles are consistent across the US.

For contracts involving the sale of goods, Article 2 of the UCC applies in all US states (except Louisiana for some purposes). The UCC contains default rules that govern goods transactions in the absence of contrary agreement.

The Restatement is an influential treatise that summarizes common law contract principles. While not binding law, courts frequently cite the Restatement.

A contract requires an offer, acceptance, and consideration. Key points:

Mirror image rule (common law): Under common law, acceptance must mirror the offer exactly. Any variation constitutes a counteroffer, not an acceptance.

Battle of the forms (UCC): Under UCC Article 2, a definite expression of acceptance operates as an acceptance even if it states terms additional to or different from the offer — subject to rules about which terms become part of the contract. Turkish companies using standard purchase orders or sales confirmations should understand how the battle of the forms affects their transactions.

US contract law requires consideration — something of value exchanged by each party. Promises to make gifts are generally not enforceable. Modifications to existing contracts may require new consideration (though the UCC relaxes this requirement for goods contracts).

Certain contracts must be in writing to be enforceable:

• Contracts for the sale of goods over $500 (UCC)
• Contracts that cannot be performed within one year
• Contracts for the sale of real property
• Guaranty agreements

Turkish companies should ensure that significant commercial agreements are documented in writing.

US contracts typically specify:

• Governing law: Which state's law governs the contract (New York law is commonly chosen for commercial contracts)
• Jurisdiction: Which courts have jurisdiction over disputes
• Venue: Where litigation will take place

New York law: New York is the most commonly chosen governing law for US commercial contracts because of its well-developed commercial law, predictable courts, and sophisticated legal community. Turkish companies should generally accept New York governing law for US commercial contracts.

US commercial contracts typically include limitation of liability provisions:

• Cap on damages: Limits total liability to a specified amount (often the contract value)
• Exclusion of consequential damages: Excludes lost profits, lost business, and other indirect damages
• Mutual vs. one-sided: Negotiate for mutual limitations, not just limitations on the Turkish party's liability

Indemnification provisions require one party to defend and hold harmless the other party against specified claims. Key issues:

• Scope: What claims are covered?
• Trigger: Does indemnification apply to third-party claims only, or also to direct claims between the parties?
• Procedure: Notice requirements, control of defense, settlement approval
• Insurance: Indemnification obligations should be backed by adequate insurance

Force majeure provisions excuse performance when extraordinary events beyond a party's control prevent performance. Post-COVID, force majeure clauses have received significant attention. Key issues:

• Covered events: What events trigger force majeure? (Natural disasters, government actions, pandemics, supply chain disruptions)
• Notice requirements: How quickly must the affected party notify the other?
• Duration: How long can force majeure excuse non-performance before the other party can terminate?
• Mitigation: Does the affected party have an obligation to mitigate the impact?

Representations and warranties are statements of fact that, if false, give the other party remedies. In M&A and commercial contracts:

• Representations: Statements about current facts
• Warranties: Promises about future performance
• Survival: How long do representations and warranties survive closing?
• Indemnification: What remedies are available for breach?

US commercial contracts typically specify dispute resolution mechanisms:

Litigation: Disputes resolved in court. New York courts are sophisticated and predictable for commercial disputes.

Arbitration: Private dispute resolution before one or more arbitrators. Advantages include confidentiality, finality, and enforceability of awards under the New York Convention. Common arbitration rules for Turkish-US disputes:

• American Arbitration Association (AAA) / International Centre for Dispute Resolution (ICDR)
• International Chamber of Commerce (ICC)
• LCIA (London Court of International Arbitration)

Mediation: Non-binding facilitated negotiation. Often required as a precondition to arbitration or litigation.

1. Read contracts carefully: US contracts are often long and detailed; do not assume standard terms are acceptable
2. Negotiate key provisions: Limitation of liability, indemnification, and dispute resolution are negotiable
3. Specify governing law: If not specified, governing law may be uncertain
4. Document modifications: Oral modifications may not be enforceable; require written amendments
5. Understand UCC default rules: For goods contracts, know what the UCC provides in the absence of agreement
6. Engage US counsel: Have US counsel review significant commercial contracts before signing

Our commercial attorneys draft, review, and negotiate US contracts for Turkish companies — from supply agreements and distribution contracts to technology licenses, joint venture agreements, and M&A transaction documents. We help Turkish companies understand US contract law and negotiate terms that protect their interests.

This article is for informational purposes only and does not constitute legal advice. Contract law is complex and varies by state; please consult qualified counsel before entering into significant commercial agreements.