Damages and Mitigation Under the CISG in Contracts with Turkish Companies

A party claiming damages from a Turkish supplier or buyer under the CISG can recover the loss, including lost profit, that was a foreseeable consequence of the breach, but the claim will be reduced to the extent the claimant failed to take reasonable steps available to it to mitigate that loss.

Damages claims arise once a breach of a CISG-governed sales contract is established, whether that is late delivery, non-conforming goods, non-payment or wrongful refusal to perform. The CISG sets its own standard for what is recoverable and imposes a duty on the injured party to mitigate, meaning it cannot simply let losses accumulate and later claim the full amount if reasonable steps could have reduced them.

The CISG entitles the injured party to damages equal to the loss, including loss of profit, suffered as a consequence of the breach, limited to the loss the breaching party foresaw or ought to have foreseen at the time of contracting as a possible consequence of the breach. The CISG also requires the injured party to take measures reasonable in the circumstances to mitigate the loss, failing which the breaching party may claim a reduction in damages equal to the loss that should have been mitigated. Where the CISG's damages framework needs supplementation, principles under the Turkish Code of Obligations No. 6098 on causation and proof of loss may be relevant as background law.

Turkish courts and arbitral tribunals applying the CISG generally require the claimant to prove both the existence and the amount of loss with reasonably specific evidence, rather than speculative projections. Foreseeability is assessed as of the time of contract formation, considering what the breaching party knew or should have known about the claimant's circumstances, such as a resale contract or a specific end use.

A recurring debate concerns how to quantify lost profit where the claimant cannot show a specific resale contract but relies instead on historical margins or market data. Another debated area is how far the mitigation duty extends, particularly whether a buyer must seek substitute goods from an alternative, possibly more expensive, supplier to reduce its loss, and how the cost of doing so is then factored into the damages calculation.

To succeed, the claimant must establish the breach, the causal link between the breach and the loss claimed, the foreseeability of that loss at the time of contracting, and that it took reasonable steps to mitigate. Where the claimant used a substitute transaction, such as buying replacement goods or reselling to a different buyer, the difference between the contract price and the substitute transaction price is often a useful measure of damages.

There is no CISG-specific limitation period for bringing a damages claim; the applicable limitation period is determined by the law that applies under the forum's conflict-of-laws rules. Claimants should nonetheless act promptly, since delay can complicate both the mitigation analysis and the evidentiary record needed to prove loss.

Damages claims are decided by the court or arbitral tribunal with jurisdiction under the contract, commonly Turkish commercial courts where the Turkish party is the defendant, or an arbitral tribunal where an arbitration clause applies.

Evidence should include the original contract terms, proof of the breach, financial records showing the loss, any substitute purchase or resale contract and its price, correspondence showing what the breaching party knew about the claimant's plans for the goods, and documentation of the mitigation steps taken, such as sourcing alternative supply.

Claimants often mistakenly assume that all consequential losses are automatically recoverable, without addressing foreseeability. Another common mistake is failing to document mitigation efforts, which leaves the claim vulnerable to a reduction argument even where the underlying breach is clear. Some claimants also delay entering into a substitute transaction, increasing the loss unnecessarily.

Can lost profit be claimed against a Turkish supplier under the CISG? Yes, provided the profit loss was a foreseeable consequence of the breach and can be proven with reasonably specific evidence.

What does the duty to mitigate require in practice? The injured party must take steps reasonable in the circumstances to reduce its loss, such as sourcing substitute goods or reselling affected goods, and failure to do so reduces the recoverable damages.

Is speculative lost profit recoverable? Generally not; damages must be shown with a reasonable degree of certainty rather than pure speculation.

Does the CISG limit how long a damages claim can be brought? The CISG itself does not set a limitation period; that question is answered by the law applicable under conflict-of-laws rules.

We help clients build a damages claim against a Turkish counterparty around clear, foreseeable loss supported by documented mitigation, since a well-evidenced but modest claim is often more effective than an unsupported claim for the maximum theoretical loss.