Short answer: if your contract only says deposit, that money is not normally forfeited, because Article 177 of the Turkish Code of Obligations treats money handed over at signature as proof that a contract was made rather than as the price of walking away. It buys you no exit. If you cancel, the venue offsets the deposit against what it is owed and can still claim the rest of its loss. The reverse holds too. Where the contract says withdrawal money, Article 178 makes each side entitled to withdraw: the payer forfeits what was paid, and the recipient who withdraws pays back double. Where a penalty clause is agreed, Article 180 says the penalty is due even if the venue suffered no loss at all. There is one more surprise for companies, because Article 22 of the Turkish Commercial Code stops a merchant from asking a court to cut a penalty on the ground that it is excessive. Here is what each term actually means, where force majeure begins and ends, whether VAT applies to a cancellation fee, and the clauses worth negotiating before you sign.
Is the deposit forfeited? The wording decides it
Turkish law separates two payments that look alike. Under Article 177 of the Code of Obligations, money given when a contract is made counts as evidence that the contract was concluded, not as withdrawal money, and unless the contract or local custom says otherwise it is deducted from the principal debt. So what the market calls a deposit is legally earnest money. It is an advance, not an exit ticket. Article 178 describes something else entirely: where withdrawal money is agreed, each party is entitled to withdraw from the contract, the party who paid forfeits what was paid, and the party who received it pays back twice the amount if it is the one withdrawing. If you see that wording in a venue contract, remember the right runs both ways, so the venue that wants to resell your date owes you double. In practice most hotels and event venues use a third structure: a sliding cancellation fee. A percentage rises as the event date approaches, for example 25 percent more than 90 days out and 100 percent inside 30 days. That percentage is not withdrawal money. It is a penalty clause, and it follows different rules.
Does the venue keep the money even with no loss?
Yes. The first sentence of Article 180 leaves no room: the agreed penalty is payable even if the creditor has suffered no damage at all. The same article sets the ceiling, since a creditor whose loss exceeds the penalty cannot claim the excess without proving the debtor was at fault. The choice sits in Article 179: where a penalty is agreed for non performance or improper performance, unless the contract shows otherwise the creditor may demand either performance of the obligation or the penalty. Not both. The last paragraph of that article leaves a door open for the paying side, reserving the debtor's right to prove it is entitled to end the contract by paying the agreed penalty. Do not leave that door to interpretation, write it in: the party that pays the fee in the table is deemed to have terminated the contract. Otherwise the venue can skip the penalty and demand actual performance, meaning the room hire plus the minimum food and beverage spend you committed to, which is almost always the larger number.
Will a court reduce an excessive penalty?
As a general rule yes, in commercial contracts no. The closing sentence of Article 182 says the judge reduces a penalty found excessive of its own motion. That protection works for parties who are not merchants. In corporate events both sides are merchants, and Article 22 of the Turkish Commercial Code applies: a debtor with merchant status cannot ask for the reduction of the fees and penalties set out in Articles 121/2, 182/3 and 525 of the Code of Obligations. The Court of Cassation recognises one narrow exception, where concrete evidence shows the penalty would drive the merchant into economic collapse. Do not sign on the strength of that exception, because the burden of proof is heavy and a penalty proportionate to an event budget rarely clears the bar. The only moment you can negotiate the percentages in a cancellation table is before signature. After that there is almost no legal room left to move.
With no penalty clause, what can the venue claim?
Then you fall back on general principles and the venue has to prove its actual loss. Two arguments help you here. The first is the second paragraph of Article 114, which applies the rules on tort liability by analogy to breach of contract, and that carries the reduction power in Article 52 into contractual claims: where the injured party contributed to causing or increasing the loss, the judge may reduce the compensation. The second argument is commercial. If the date you released is resold, the venue's loss shrinks accordingly, and the Istanbul calendar is not empty. In the ICCA 2025 country and city rankings, Istanbul climbed to 18th in the world with 95 international congresses, while Türkiye placed 33rd with 142. In a city with that level of demand, a released Saturday evening rarely stays empty. Raise the point in the cancellation conversation, and better still, get a line into the contract from the start: if the date is sold to another client, the amount collected is refunded. That line belongs in the penalty clause as well, because Article 180 means a reduced loss is not on its own a defence against an agreed penalty.
Earthquake, a governor's ban, an epidemic: what counts as force majeure?
The test sits in Article 136: if performance becomes impossible for reasons the debtor cannot be held responsible for, the obligation ends. The second paragraph handles the money, since in bilateral contracts the party released by impossibility has to return what it received under the rules on unjust enrichment and loses the right to claim what has not yet been performed to it. Genuine impossibility brings the deposit back. The third paragraph adds a duty: a debtor who fails to notify the creditor without delay and to take the measures needed to keep the loss from growing has to cover the damage that follows. Sitting on the news gets expensive. The Court of Cassation draws the boundary. In its General Assembly of Civil Chambers decision of 27 June 2018, file 2017/90 and decision 2018/1259, force majeure is defined as an extraordinary event arising outside the activity and business of the responsible party or debtor, leading absolutely and unavoidably to the breach of a general standard of conduct or of an obligation, and impossible to foresee or resist. Earthquakes, floods, fires and epidemics are given as examples. Article 137 covers partial cases: if performance becomes partially impossible the debtor is released only from the impossible part, unless it is clear the parties would not have made the contract at all had they foreseen it, in which case the whole obligation ends. A delayed speaker flight, lower than expected attendance or a cut budget do not meet the definition.
Costs and exchange rates moved. Can the contract be adapted?
The adaptation claim lives in Article 138 and needs four conditions together. An extraordinary situation that the parties did not foresee and could not have been expected to foresee must arise, for a reason not caused by the debtor, changing the facts existing at signature against the debtor to a degree that makes demanding performance contrary to the rules of good faith, and the debtor must not yet have performed or must have performed while reserving its rights. If all four are met, the debtor may ask the judge to adapt the contract to the new conditions, or to rescind it where adaptation is not possible. The final paragraph extends the article to debts in foreign currency. The threshold is high, and ordinary inflation or a familiar currency movement is not treated as unforeseeable. The practical fix belongs in the contract rather than in court. Set a currency threshold and a repricing window for prices quoted in foreign currency, and add a date change clause. Most venues will grant one free postponement within the same season, because a moved event beats a cancelled one. Ask for it before you sign, not on the day you decide to cancel.
Is a cancellation fee invoiced, and does VAT apply?
A payment that is a penalty in nature is not consideration for a supply of goods or services, so it falls outside VAT. Section 1.2 of VAT Circular number 60 issued by the Turkish Revenue Administration says it plainly: payments made under names such as compensation or withdrawal fee, which are penalty clause payments arising because work was not performed in line with the contract, was not completed in time, or because the contract was terminated, are outside the scope of VAT since they are not consideration for any supply. What decides the treatment is the nature of the payment rather than its label. If the same amount is structured as the price of a service, for instance where the venue issues a service invoice instead of a cancellation charge, VAT comes back into play. Stamp tax is a separate item and often gets missed. Contracts stating a determinable amount are subject to stamp duty at 9.48 per thousand in 2026, and under General Communiqué number 71 on the Stamp Tax Law dated 31 December 2025 the ceiling per document is 29,115,961.10 lira. Article 24 of Law 488 makes everyone who signs a document jointly liable for the full tax and penalty on it, so an unpaid duty at the venue's end can land at your door. Put the allocation of that cost in the contract.
If it turns into a dispute, and what to put in the contract
You cannot go straight to court. Article 5/A of the Turkish Commercial Code has, since 1 January 2019, made applying to a mediator a procedural requirement in commercial cases seeking payment of a sum of money or damages. The process is short, the outcome is not guaranteed. According to the Ministry of Justice 2025 judicial statistics, of 253,064 commercial mediation files where negotiations were completed, agreement was reached in 60,492, roughly one in four. The rest go to court, and the time that takes fits no event calendar. The real work happens at the contract table. Get these six items in: the sliding cancellation table paired with one free date change within the same season, a definition of force majeure together with refund of amounts already paid in that case, an offset if the date is sold to another client, a payment schedule tied to the event date and interim milestones, the written form and service address for a cancellation notice, and subcontractor agreements bound to the same cancellation terms as the main contract. That last one is the most commonly skipped, because cancelling the venue does not release you from your sound, lighting, LED screen, staging and catering contracts. Each is a separate obligation with its own cancellation table. Tales Event is based in Istanbul and runs the venue, stage, sound, lighting and LED screen setup under a single contract for dealer meetings, launches, openings, gala nights and graduation ceremonies. Send us your date and the venue offer on your desk and we will go through the cancellation and postponement clauses alongside the budget.
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