In the business world, invoices are crucial documents that detail the goods or services provided and the corresponding payment required. However, disputes over invoices are common and can arise from various issues such as discrepancies, errors, or misunderstandings. This article will explore the process of objecting to an invoice in Turkiye, the legal framework surrounding it, and the potential consequences for both parties involved.
1. Legal Description of the Invoice
The concept of “invoice” is defined in Article 229 of the Tax Procedure Law No. 213:
“Definition of invoice: Invoice is a commercial document given to the customer by the merchant who sells the commodity or performs the work in order to show the amount owed by the customer in return for the commodity sold or the work performed.”
Within the framework of the provision 231/5 of the same law, the invoice is issued within a maximum of seven days from the date of delivery of the goods or the service.
According to Article 21/1 of the Turkish Commercial Code No. 6102 (“TCC”):
“A merchant who has sold, produced, performed a work or provided a benefit in the context of his commercial enterprise may request the other party to provide them with an invoice and, if the price has been paid, to show this in the invoice.”
In this context, especially in invoice transactions between merchants, it is required and foreseen that both parties should take due care as prudent merchants regarding the issuance, notification and objection processes of the invoice and perform these transactions duly.
2. What Kind of Disputes May Arise with Invoices?
Invoice disputes occur when a buyer disagrees with the details or the amount stated on an invoice issued by a seller. These disputes can stem from several reasons, including:
Errors in the Invoice: Incorrect pricing, quantity, or description of goods/services.
Non-compliance with the Contract: Delivery of goods/services that do not meet the agreed-upon standards or specifications.
Fraudulent Invoices: Invoices issued for goods/services that were not ordered or received.
Double Billing: Receiving multiple invoices for the same goods/services.
3. Legal Framework for Invoice Objections in Turkiye
The Turkish Commercial Code (TCC) and the Turkish Code of Obligations (TCO) provide the legal basis for handling invoice disputes. These laws outline the rights and responsibilities of both the seller and the buyer in commercial transactions. To properly object to an invoice, businesses should follow these steps (Reminder: These actions have technical conditions, so professional accounting and legal support is required):
3.1. Review the Invoice Thoroughly: Compare the invoice with the original purchase order, delivery notes, and any other relevant documents to identify discrepancies.
3.2. Gather Evidence: Collect all necessary evidence to support the objection, such as emails, contracts, delivery receipts, and any communication related to the transaction.
3.3. Timely Objection: Buyers must object to an invoice within a reasonable time frame after receipt. A person who has been notified of an unfair invoice and/or an invoice in breach of the contract may object to the invoice within eight days from the date of notification. This issue is regulated under Article 21/2 of the TCC as follows:
“A person who receives an invoice shall be deemed to have accepted the content of the invoice if he has not objected to the content of the invoice within eight days from the date of receipt.”
3.4. Notification of Objection: The law does not stipulate the form of objection to the invoice.
However, in order to avoid any hesitation in possible disputes:
- The objection must be communicated in writing to the seller,
- The objection must be specifying the reasons for the dispute and providing any supporting documentation.
The objection letter should include: Invoice number and date, detailed explanation of the discrepancies, reference to any supporting documentation, a request for correction or resolution.
As we have mentioned, it would be useful to clearly explain the grounds for objection in the objection to the invoice. Instead of writing abstract objections, the basis of the objection shall be explained.
Bad example of objection: “We object, we do not owe any debt” (It does not clarify the ground of objection.
Better examples of objection:
- “We did not buy such a product, we did not do the trade mentioned in the invoice”
- “Since the delivery date was not met, we exercised our contractual right not to take delivery of the product and procured it elsewhere”.
Again, if there is a defective performance situation, that is, if there is a problem with the invoiced goods or services, instead of objecting with abstract statements such as “the products were bad, they did not work for us”, it would be useful to reveal the problem with concrete statements such as “we ordered red fabric but gray fabric was sent”, “the eggs we ordered were sent to our company in a broken state although the transportation belonged to the seller”, “the canned food was sent with holes, expiration dates expired, and protective strips were not attached”.
Follow Up: Verify that your notification of objection is delivered by the counter party. Maintain communication to resolve the dispute. Keep records of all correspondence and negotiation.
4. How to Appeal an E-Invoice?
Electronic invoices have the same nature as paper invoices, they are not a separate legal document. Therefore, there is no separate regulation for objection to e-invoice, the methods explained above are also valid for e-invoices. The e-invoice objection period is also in line with what we have explained above.
5. Consequences of Invoice Objections
The consequences of objecting to an invoice can vary depending on how the dispute is handled and resolved.
5.1. Consequences For the Buyer
Delay in Payment: While the dispute is being resolved, the buyer may withhold payment for the disputed amount. However, this does not relieve the buyer of the obligation to pay undisputed amounts.
Legal Action: If the dispute cannot be resolved amicably, the buyer may need to initiate legal proceedings. This can result in additional costs and time expenditure.
Impact on Business Relationships: Persistent invoice disputes can strain business relationships. It is important for buyers to approach disputes professionally to maintain positive relationships with suppliers.
5.2. Consequences For the Seller
Cash Flow Issues: Delayed payments due to invoice disputes can affect the seller’s cash flow, especially if the disputed amount is significant.
Reputational Impact: Frequent invoice disputes can harm the seller’s reputation, indicating potential issues with billing accuracy or service quality.
Legal Recourse: If the buyer’s objection is unfounded, the seller may need to pursue legal action to recover the disputed amount. This can involve legal fees and court costs.
6. Legal Remedies and Enforcement
When amicable resolution fails, both buyers and sellers have legal remedies available under Turkish law. Under this heading, legal remedies will be briefly explained. More detailed articles on legal remedies are available on our website.
6.1. Mediation
Mediation is often the first step in resolving commercial disputes. It offers a confidential and cost-effective way to reach an agreement without going to court.
6.2. Arbitration
Arbitration is another alternative dispute resolution method where an arbitrator makes a binding decision. It is generally faster and more flexible than litigation.
6.3. Litigation
If mediation does not solve the dispute or arbitration is not an agreed dispute solution way, parties can resort to litigation. The following legal actions can be taken:
Commercial Court: Disputes over invoices are typically handled by commercial courts in Turkiye. The court process involves filing a lawsuit, presenting evidence, and attending hearings.
Enforcement Proceedings: If a court ruling is obtained in favor of the seller, enforcement proceedings can be initiated to recover the owed amount. This may involve asset seizure or garnishment of bank accounts.
Warning: Cons of Litigaiton: Unfortunately, litigation in Turkey is slow, costly and inefficient. In many cases, the results of litigation are also unsatisfactory. Due to inflation, receivables denominated in Turkish Lira are eroded during long litigation processes. For these reasons, we do not recommend litigation, except in compelling circumstances. While providing legal support, we focus on resolving problems through reconciliation as much as possible.
7. Best Practices for Avoiding Invoice Disputes
To minimize the risk of invoice disputes, businesses should adopt the following best practices:
Clear Contracts: Ensure all agreements and contracts are clear, detailed, and include specific terms regarding payment, delivery, and quality standards.
Accurate Invoicing: Implement robust invoicing systems to reduce errors. Double-check invoices for accuracy before sending them to clients.
Prompt Communication: Address any discrepancies or issues immediately. Maintain open lines of communication with clients to resolve potential disputes quickly.
Documentation: Keep detailed records of all transactions, communications, and agreements. This documentation will be invaluable in case of a dispute.
Regular Audits: Conduct regular audits of invoicing and billing processes to identify and rectify potential issues proactively.
8. Legal Consequences of Failure to Object to the Invoice in Due Time
According to Article 21/2 of the TCC: “A person who receives an invoice shall be deemed to have accepted the content of the invoice if he has not objected to the content of the invoice within eight days from the date of receipt.”
As can be seen, the law sets forth a presumption that the invoice shall constitute evidence against the person in whose name the invoice is issued, unless the addressee objects within the time limit.
The eight-day period is important only in terms of shifting the burden of proof. If the objection is made within the eight-day period, the burden of proof that the content of the invoice is in accordance with the contract belongs to the party who issued the invoice, whereas if the objection is made after the expiration of the eight-day period, the burden of proof that the content of the invoice is not in accordance with the contract belongs to the party who received the invoice.
In this context, the most important consequence of not objecting to the invoice within the time limit is the shifting of the burden of proof between the parties on the existence/non-existence of the debt subject to the invoice. Namely; if the invoice is objected, the seller who issued the invoice will be obliged to prove that this invoice is justified in a possible lawsuit. However, if the invoice is not objected to within the time limit, in the event of a possible lawsuit, the party receiving the invoice will be obliged to prove the total or partial “non-existence” of the debt subject to the invoice.
9. Should a New Invoice be Created in Case of Unfair Objection to the Invoice?
In practice, it is seen that after the invoice is objected to, the issuer of the invoice issues a new invoice and this invoice is objected to again. In this way, the parties enter into a cycle of stubbornness. Likewise, it is also observed that there are mutually protracted processes in the form of issuing a return invoice against the invoice.
In fact, with the issuance of an invoice for a commercial business and the objection to this invoice, the end of the road is reached legally in terms of issuing an invoice in terms of this commercial business. There is no legal innovation to be brought by issuing an invoice again. From this point on, it will be necessary to reach a compromise or resort to legal remedies according to the requirements of the concrete case.
10. Is a Sanction Applied to the Party Who Objects to the Invoice Unfairly?
No special sanction is envisaged for the party who objects to the invoice unfairly, solely due to its objection. However, if the party issuing the invoice proves that the debt in the invoice is justified and the conditions are met; the debtor will be able to make claims such as default interest, execution denial compensation, financial compensation, execution and trial costs and attorney fees, which will start from the moment the debtor is in default.
11. Conclusion
Invoice disputes are an inevitable part of business, but understanding how to properly object to an invoice and knowing the potential consequences can help businesses manage these situations effectively. By following the legal framework in Turkiye, maintaining good communication, and adhering to best practices, businesses can minimize the impact of invoice disputes and maintain healthy business relationships.
A Reminder About Business Starters’ Legal Kit: This article is a part of “Business Starters’ Legal Kit” series. As we explained in our introductory article, the articles in this series contain essentials only. For detailed information, you can review the articles in special categories on our website or contact us.
Disclaimer: The information and opinions on this page are for general information and academic contribution purposes. It may not reflect the views of Otto Law and Mediation. Due to the fact that law is a dynamic field, the information and opinions on the site may be out of date. The articles on the site may not reflect the prevailing doctrine or common judicial practices in that field and may contain the author’s own legal convictions. The information and legal opinions on this site are not legal advice and these contents are not intended to be legal advice. It is recommended to seek professional legal support for specific cases. Otto Law and Mediation or the author of the relevant article are not responsible for the consequences of applying the information and opinions on the site to concrete events. We present it to your information.
