What this guide covers

Topic-specific conditions and document preparation.

A short questionnaire explains which records may matter and produces a document checklist. It does not assess eligibility or predict a case outcome.

Documents discussed in this guide
  • Agreement, annexes and release clause
  • Delivery, acceptance, approval and final-account records
  • Progress certificates, bank payments and earlier releases
  • Deficiency, counterclaim and completion correspondence
  • Repayment demand and receipt evidence
  • Enforcement, service of objection and any mediation record

Full topic-specific Information Guide ↓

Even where most of the construction price has been paid, sums retained from progress payments may represent a substantial contractor receivable. Saying that the work is finished and retention must be paid immediately is not sufficient in every case; equally, the client’s assertion that final accounts are outstanding does not itself authorise indefinite withholding. Start by identifying the money retained, the release condition and the records establishing that the condition has been met.

1. Distinguish retention money from a bank guarantee

This article concerns repayment of money withheld from progress payments and held by the client or higher-tier contractor. Returning a bank guarantee, preventing its encashment, a pre-tender provisional security or a separate security account are different matters. The word security on a record does not establish identical conditions or limitation periods for every arrangement. The contract, payment schedule and accounting records should identify who actually holds the money.

For example, retention at five per cent does not establish a statutory five-per-cent release rule for every construction project. Calculate the rate, retention base, earlier releases and balance under the agreement. The same money must not be claimed twice as both an unpaid progress-payment balance and retention repayment. A subcontractor must likewise identify its contractual debtor rather than automatically treating the public authority as directly liable.

2. Examine release conditions and maturity together

Article 479 of the Turkish Code of Obligations takes delivery as the point at which the contract price becomes due, subject to examination of contrary arrangements. The parties may nevertheless tie retention release to provisional acceptance, final acceptance, approval of final accounts, completion of particular deficiencies or a period following one of these events. Provisional and final acceptance, or delivery and approval of accounts, are not interchangeable. Identify each condition and the record establishing its fulfilment.

Clauses referring to payment by the authority require separate reading. Receipt by the main contractor, delivery by the subcontractor and release of retention may be linked to different events. Identify the release condition from the complete agreement, annexes and amendments rather than inferring it from the general progress-payment clause. Public procurement contracts and special specifications require examination under their own regime; a public-project timetable does not automatically apply to a private contract.

3. Why does the Court of Cassation require delivery and payment records together?

In its judgment dated 13 June 2019, E.2018/2398, K.2019/2765, the Fifteenth Civil Chamber considered a subcontractor’s action to annul an objection to enforcement for unpaid work and retention. That agreement linked progress-payment maturity to ten days after payment by the authority and retention release to forty-five days following approval of the subcontractor’s work and provisional acceptance. Those periods belonged to that particular agreement.

The Chamber reversed the judgment allowing the claim because delivery, acceptance, approval, provisional acceptance, main-contractor progress payments and payment records had not been collected. It required maturity and release conditions to be assessed as at the enforcement commencement date. The judgment therefore does not give every subcontractor an automatic right to payment after forty-five days. For the contractor, the lesson is to prove not only the retention amount but also the events triggering its release timetable.

4. Where acceptance or approval never takes place

Delay by the client in acceptance or accounting may warrant separate examination. Article 175 treats a condition as fulfilled where a party prevents its fulfilment contrary to good faith. Not every delay is automatically bad faith, however. That provision cannot produce a release date without identifying the condition’s legal nature, readiness of the work, requests for acceptance, accounts submitted, genuine deficiencies and the reason for delay.

Dated requests for acceptance, lists of outstanding work, completion records and evidence of dispatch and receipt matter. The client may be asked to identify in writing which deficiency is said to prevent release. Such a request does not transform unfinished work into completed work. Where delivery and acceptance records are absent, assess why they are missing alongside actual use and inspections carried out.

5. Retention calculations, offsets and interest

For each progress payment, show the gross amount, retention rate, sum withheld, payment made and earlier release separately. A difference between the bank payment and progress report may include tax, advances, penalties or other deductions rather than retention alone. Check the precise claim and amount supporting any alleged defect, delay or loss relied upon by the debtor. A bare assertion of damage does not itself establish a right to retain all money permanently.

Maturity and debtor default are also distinct. Article 117 generally requires a demand concerning a due debt, subject to the statutory fixed-date and other exceptions. A release date does not establish interest for every preceding period. The demand should identify the contractual clause, fulfilled release condition, outstanding balance and request for payment, with evidence of receipt. The interest type and starting date depend on the legal relationship as well.

6. Litigation, mediation and enforcement

For a commercial dispute, subject-matter jurisdiction is assessed under Articles 4–5 of the Commercial Code concerning the commercial court. Consumer relationships or other special jurisdiction require separate treatment. A link with a public project does not itself turn a private-law receivable into an administrative action. Territorial jurisdiction generally requires consideration of the defendant’s domicile, contractual place of performance, any valid jurisdiction agreement and special rules. Naming a city in the agreement does not make every jurisdiction clause valid.

Check mandatory mediation under Article 5/A for commercial monetary, compensation or objection-annulment litigation. In ordinary non-judgment enforcement, the debtor may object within seven days from service of the payment order; timely objection suspends enforcement. Article 67 provides one year from service of the objection on the creditor to seek its annulment. Enforcement before maturity can create unnecessary costs and counterclaims; commencing first and locating evidence later is not a sound approach.

7. Distinguish five-year limitation from the one-year action period

Ordinary receivables arising from a contract for work engage the five-year limitation under Article 147(6); Article 149 governs commencement upon maturity. A retention arising from a separate legal relationship or a special regime may change the analysis. The one-year period for objection-annulment proceedings has a different starting point and does not add a year to the five-year period. If missed, any ordinary debt action still requires separate limitation analysis.

Sending a demand alone does not automatically interrupt limitation. Article 154 addresses interruption through acknowledgement, partial performance and litigation or enforcement, among other grounds; examine which receivable each record concerns. The final preparation asks four questions: what balance was actually retained, which condition was fulfilled, when was it fulfilled and when did the debtor fall into default? The guide below organises that preparation without guaranteeing recognition or recovery of the claim.

Sources

General information; individual documents, facts and procedures need separate review.

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Retention repayment: the contractor’s conditions and document guide

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