Penalty clause in Turkish private law

The subject of our study is the penalty clause regulated between Articles 179 and 182 of the Turkish Code of Obligations No. 6098. The penalty clause is an obligation with economic value, which, while being separate and independent, also has a subsidiary nature. It ensures the performance of the existing and valid main obligation by exerting pressure on the debtor and guarantees the compensation of the creditor's potential damages in case the main obligation is not performed at all or is performed improperly. As a rule, the parties can freely determine the penalty clause within the framework of freedom of contract. However, the amount of the freely agreed penalty clause can sometimes be excessive to a degree that would violate fairness. In such cases, to prevent the debtor's economic exploitation and ensure contractual justice, the principle of freedom of contract is limited by granting the judge the authority to reduce the penalty clause by intervening in cases of excessiveness. In our study, the concept of the penalty clause and the reduction of the penalty clause in cases of excessiveness are examined within the framework of the views in the doctrine and the decisions of the Supreme Court. In the first part of our study, the concept of the penalty clause is addressed, and in this context, the definition, purpose, legal nature, elements, and types of the penalty clause are examined; the relationship of the penalty clause with fault and damage and its difference from similar concepts are explained. In the second part, the purpose, legal nature, conditions of the reduction of the penalty clause, and the reduction of the penalty clause in terms of the debtor with the status of a merchant are discussed. In the third part of our study, procedural actions related to the reduction of the penalty clause are included. Keywords: Penalty Clause, Reduction of Penalty Clause, Excessive Penalty Clause, Immorality of Penalty Clause