Liquidation of ordinary partnership

According to the 1st paragraph of Article 620 of the Turkish Code of Obligations (TCO), the ordinary partnership agreement is a partnership, in which at least two persons undertake to combine their labor or property for a common purpose. Elements of the ordinary partnership agreement are person, contract, purpose, contribution and "affectio societatis". Situtations leading to termination of the ordinary partnership are regulated in Article 639 of TCO. These are the realization of the partnership purpose or the purpose becoming impossible to realize, the death of a partner in the event that the partnership is not registered with the heirs in the contract, the restriction of a partner, the liquidation or bankruptcy of a partner by enforcement, the expiry of the period stipulated for the partnership in the contract and finally partners' right to request from the court the termination of the partnership due to just cause. With this regulation, the legislator has limitedly listed the reasons for the termination of the ordinary partnership. The parties cannot mutually agree on any reason apart from these for termination of the agreement. The origin of the concept of liquidation is the assets. If there are no assets, the liquidation could not be possible. Termination of the ordinary partnership has some consequences. Main results of the termination are the changes in the rights and obligations of the partners, which occur as the partnership enters the liquidation process. In the liquidation phase, the purpose of the ordinary partnership is determined for the liquidation. Liquidation of the ordinary partnership is regulated in Article 644 of TCO. However, the procedures to be carried out during liquidation are not mentioned in this article. Two new provisions that were not included in the repealed TCO have been included in this law. However, even these provisions are insufficient to solve the problems emerging during liquidation. The case law of the Court of Cassation regarding liquidation has become established. But despite these two new provisions, there has been no change in the Court of Cassation's case law. The provisions of the TCO stipulate that the liquidation of the ordinary partnership should be done mutually by all partners. A provision in the TCO states that only a liquidator will be appointed in disputes regarding liquidation. The execution of the liquidation by the court itself is not foreseen by the legislator. However, according to the Court of Cassation, the liquidation must be carried out by the court. The court should not withdraw itself from the liquidation process after deciding on the termination of the ordinary partnership. Along with the decision on termination, the court should also reach a decision on liquidation. According to the Court of Cassation, liquidation should be carried out in three stages. In the first stage, the assets of the partnership are determined on the basis of the ending date of the ordinary partnership and the balance sheet of the assets determined by the liquidator is notified to the parties. In the second stage, the sales and cashing of assets are carried out by implementing regulations in Article 634 and the following provisions of TCO by analogy. If these goods are not available, their values are determined by experts. In the third stage, at first the debts of the partnership, followingly the advances given by each of the partners to the partnership and the expenses made for the partnership should be paid from the determined value. From the remaining amount, the capital shares must be paid back to the partners. If there is anything left at hand, the gain or loss should be shared among the partners; the final balance sheet should be created. Subsequently, the judge determines the rights and obligations of the parties according to the final balance sheet and terminates the liquidation. The opinion of the Court of Cassation is not correct. The legislator has not made a provision that the liquidation should be carried out by the court. Article 644 of TCO regulates the duty of the court in disputes that may arise during the appointment of the liquidator and the liquidation process. If the legislator wanted the liquidation to be carried out by the court, the law should have included clear provisions on this matter. Keywords: Assets, Ordinary Partnership, Termination, Liquidation