Conceptual confusion in subcontracting: Contractor or contractor?

There are four concepts we frequently encounter in the business world, but are often confused: contractor, contractor, subcontractor, and subcontractor. In this article, we will clarify both the etymology and legal basis of these concepts, focusing specifically on the distinction between contractor and contractor.

Origins and Legal Basis of Concepts

The Turkish Language Association defines the word “contractor” as follows: “A contractor is a natural or legal person who is obliged to carry out construction work on his own behalf or to which he has been assigned under contract.”

This definition directly identifies contracting with construction. However, its scope of application encompasses not only construction but also services and the production of works. This is where the concept of "contractor" comes into play. Specifically, individuals or organizations operating under a work contract are called contractors.

Article 470 of the Turkish Code of Obligations No. 6098 also supports this distinction: “A work contract is a contract in which the contractor undertakes to create a work and the employer undertakes to pay a price in return.”

This definition reveals that the contractor can operate not only in construction but also in different areas such as service and production.

A Real-Life Scenario

Textile Company A wants to build a new factory and is awarding the project on a turnkey basis to Contracting Company B. This project includes not only the building construction but also services such as technical infrastructure, machinery installation, software integration, and quality control.

In this situation:

If B Contracting had undertaken only the building construction, it would have been a contractor. If it had undertaken only the facility's commissioning, it would have been a contractor. However, because it undertakes both tasks simultaneously, it is both a contractor and a contractor.

While construction work generally falls into the high-risk category, most service work falls into the low-risk category. Occupational Health and Safety Law No. 6331 and Social Security and General Health Insurance Law No. 5510 may impose different obligations depending on the nature of the work. Therefore, correctly defining the type of work directly impacts both the contract structure and legal responsibilities.

To summarize the concepts of contractor and contractor in one sentence: “The person who undertakes the main work on a project basis is the contractor if the work is construction work, and the contractor if the work is work or service work.” Making this distinction correctly is very important for regulatory compliance and the sustainability of the work.