In construction, completing the work and collecting payment do not always happen at the same time. The contractor completes the works and pays subcontractors and material suppliers, while the employer withholds payment on grounds of incomplete work, acceptance procedures or disputed accounts. The first question is therefore not simply how much is owed. When payment became due, how handover can be proved and the legal basis for the proposed deductions must be considered together.

This article focuses on monetary claims arising from contracts for work governed by private law. Public construction projects, construction in exchange for land shares and agreements involving the transfer of immovable property may require examination of additional provisions.

When can the contractor demand payment?

Under Article 479 of the Turkish Code of Obligations, the employer’s obligation to pay generally becomes due upon handover of the work. A debt becoming due means that payment can be demanded. Where delivery in separate parts and a separate price for each part have been agreed, the price for each part becomes due when that part is delivered.

The contract is decisive in this assessment. It may provide for an advance, monthly progress payments, specific construction milestones or a payment schedule following handover. Completion of the entire construction project is therefore not necessary in every case. Conversely, preparing a progress-payment statement and payment becoming due under the contract may be different steps. Approval, document-submission and payment-date provisions must be read together. Turkish Code of Obligations, Article 479

For example, if a specified amount is payable on completion of the structural works, ongoing finishing works do not automatically eliminate that payment obligation. However, the contractor must show that the structural works have reached the contractual milestone and that any payment conditions have been satisfied. A recovery file should identify a separate due date and supporting evidence for each payment item.

Is the claim lost if there is no handover record?

A handover record is important evidence, but its absence does not mean that handover never occurred in every case. The nature of the work, its actual use, delivery of keys, relevant correspondence and other documents may be considered. Nevertheless, merely saying that the work is already being used is not sufficient under every contract.

The contractor should bring together the contract and its annexes, signed progress-payment statements, handover or acceptance documents, quantity measurements, site records, photographs, payment statements and correspondence with the employer. Complete electronic messages should be preserved with dates and party details. A single screenshot taken from a conversation may be insufficient to establish its context or the sender’s identity.

In its judgment of 11 December 2023, case no. 2023/1542, judgment no. 2023/4164, the 6th Civil Chamber of the Court of Cassation examined a payment dispute between a subcontractor that had installed lifts and the main contractor. The continuing contract, the lifts being in use and the engagement of another company for maintenance were considered, and the regional appellate court’s decision concerning payment was upheld in that particular case. The judgment shows that a missing document does not invariably defeat a claim. However, its assessment of evidence depended on that case’s circumstances and does not produce an automatic result for every construction project. Full judgment

How should deductions for incomplete work, defects and delay be examined?

Not every reason advanced by the employer for withholding payment has the same legal effect. Incomplete works, defective works, delay penalties and advances already paid are separate accounting items. One justified deduction does not establish that the others are justified too.

The contractor should ask which work item and contractual provision support each deduction. In a technical dispute, whether the work is actually incomplete, the scope of repair costs and whether a malfunction arose from use must be examined. Extensions of time, obstacles attributable to the employer and the contractual penalty provisions also matter when assessing delay.

The cited Court of Cassation judgment also considered the failure to prove that the right to a delay penalty had been reserved at handover. It would be wrong to interpret this as meaning that a delay penalty is lost whenever work is accepted. The type of penalty, contractual provisions and notices made during acceptance must be examined separately.

Protecting the contractor does not mean rejecting every deduction as a group. It means separating justified deductions, challenging unsupported ones with concrete evidence and establishing why an undisputed amount remains unpaid.

Which date matters for default notices and interest?

A claim becoming due and the debtor falling into default are different issues. Under Article 117 of the Turkish Code of Obligations, default on a debt that is due generally requires a notice from the creditor. Where the parties have jointly fixed the payment date, however, expiry of that date may trigger default without a notice.

The notice should therefore clearly identify the contract, relevant progress payment or works, amount demanded and payment due date. Demanding a large amount without deducting advances already paid or explaining disputed additional works may complicate the subsequent dispute.

The starting date and applicable type of interest are determined with regard to the contract and the nature of the transaction. It is incorrect to apply the same interest rate to every claim or invariably treat the invoice date as the start of default. Turkish Code of Obligations, Article 117

Enforcement proceedings or a payment lawsuit?

Enforcement proceedings without a prior judgment may be available for a monetary claim. In ordinary attachment proceedings, the debtor may object to the payment order within seven days of service. Starting enforcement proceedings does not mean that a disputed calculation of the works has been conclusively determined.

The remedy following an objection depends on the documents available. If the document requirements in Article 68 of the Enforcement and Bankruptcy Law are met, an application to lift the objection may be made within six months after the objection is served on the creditor. Not every invoice or progress-payment statement qualifies as such a document. Article 67 provides a one-year period from service of the objection for a lawsuit to annul the objection before the competent trial court. If that period expires, the right to bring a payment claim under the general rules must be assessed separately. Enforcement and Bankruptcy Law, Articles 62, 67 and 68

The competent type of court also varies. Where the requirements for a commercial case are met, the commercial court of first instance is relevant; special provisions apply to disputes constituting consumer transactions; and the civil court of first instance is relevant where no special subject-matter jurisdiction rule applies. Pre-action mediation requirements must be checked for commercial monetary claims and lawsuits to annul objections. Statutory exceptions and the jurisdiction of consumer arbitration committees must also be examined in consumer disputes. Territorial jurisdiction requires consideration of the defendant’s domicile and the place of contractual performance. The location of the construction project should not be assumed to be the sole competent venue for every monetary claim.

The cost of waiting: limitation periods

Under Article 147 of the Turkish Code of Obligations, claims for payment arising from contracts for work are generally subject to a five-year limitation period. The period begins when the claim becomes due. Where progress payments have different due dates, each must be tracked separately.

Sending a notice through a notary does not, by itself, interrupt limitation. Grounds listed in Article 154, such as acknowledgment of the debt, a lawsuit or enforcement proceedings, must be considered separately. In mandatory pre-action mediation, limitation is suspended and time limits extinguishing the right do not run between the application and the final mediation record. Turkish Code of Obligations, Articles 147, 149 and 154, Law No. 6325, Article 18/A

A strong recovery file connects the scope of the completed work, handover, the payment due date and the net outstanding balance. Clear payment conditions when the contract is signed and preservation of evidence while work continues directly affect the strength of the steps taken once the claim arises.

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