Turkey: Suretyship Under The New Turkish Code Of Obligations: "Just Sign Here!"

The New Turkish Code of Obligations will enter into force in July 2012 and will introduce many noteworthy changes to the suretyship (kefalet) institution, which is a widely used legal instrument of personal guarantee, perhaps most commonly invoked to secure loan agreements in Turkey.

The amendments introduce new limits to the extent of a surety's liability against the lender, and a more elaborate written form requirement that seems to be a reaction to the "just sign here" attitude that the current legislative scheme enabled. In this article, we have summarized various of the noteworthy provisions in the New Code of Obligations pertaining to suretyship contracts that either did not exist previously, or will significantly amend the current legislative scheme once the new law enters into force.

The most practical implication of the amendment is the new requisite written form for entering into a surety contract. The former regime required that an agreement giving rise to a suretyship obligation be in written form in order to create a valid and binding obligation. The New Code of Obligations goes one step further and requires that the following elements of the contract be handwritten by the person agreeing to act as surety for another person's debt or obligation: (i) the maximum amount of liability to be assumed by the surety; (ii) whether joint and several liability is assumed; and (iii) the date of the agreement. The prevailing banking practice in Turkey has been the "just sign here" attitude, whereby the surety contract was reduced to filling in printed forms, and the surety signed the signature block without the bank having to document the surety's signature or the aforementioned primary elements of a surety contract. The goal of this amendment appears to be to ensure that the person providing the surety considers, understands and actively consents to the subject matter, amount and duration of this undertaking. Any power of attorney issued to allow the attorney to take on the liability for the debt or obligations of a third party, resulting in the principal becoming a surety, is subject to the same formal requirement. Any amendments to an existing surety contract, such as an extension of term or a variation in the amount of liability must also be in writing, setting forth the aforementioned contractual elements in the handwriting of the person agreeing to act as provider of the surety.

The new legislation appears to be partly driven by social policy, as it requires the written consent of the spouse of a natural person agreeing to act as surety. Spousal consent is also sought where the amount or nature of the surety contract is being amended.

A general principle of the suretyship law is that the liability of the surety is secondary to that of the debtor, unless the surety assumes joint and several liability (acknowledging this in writing, as noted above). The New Code of Obligations does not result in the surety becoming primarily liable per se, even where joint and several suretyship is established by contract. The new legislation requires that the creditor first demand that the defaulting debtor pay off the outstanding amount, and allows the creditor to seek repayment from the surety's assets if and when the creditor fails to recover such amount from the debtor, or if the debtor is insolvent and it does not seem likely that any such debt recovery effort will be successful.

The obligation to first seek repayment from the original debtor enables the surety to delay the creditor in seizure of the surety's assets. In cases where the debtor is in default and fails to make payment despite having been notified of his/her obligation, or he/she is in apparent financial hardship, the creditor may seek to recover its debt from the jointly and severally liable surety provider. Another significant change that would comfort joint and several sureties is that the creditor is required to, firstly, accept pledged assets or receivables through which to recover its debt. If the debt is secured by a pledge on receivables or personal property, the creditor must first force a sale of the pledged property in order to satisfy the debt before proceeding to recover from the joint and several surety. There are also some exceptions to this provision. Should the court determine that the value of the pledged property does not suffice to satisfy the debt, or the debtor is bankrupt or enters into an arrangement with creditors, the creditors may then resort to the joint and several surety without having to resort to the aforementioned procedure.

The surety will not only be able to delay payments for reasons enumerated above, but will also be able to refrain indefinitely from payment should one of the causes identified in the New Code of Obligations emerge. To begin with, a surety will be liable only for those debts or obligations that came into existence after the formation of the surety contract, unless the contract expressly provides otherwise. The typical general loan agreement provision whereby the surety assumes responsibility for all kinds of debt and liability incurred, or that will be incurred, by the debtor against the bank will now have to be reconsidered. The person acting as surety may also object to payment should the debtor be rendered unable to make payment as a result of circumstances preventing his/her payment, e.g., restrictive foreign exchange controls. The debtor's waiver of a defense against the creditor (e.g., statute of limitations) will not preclude the surety from raising such defenses.

Finally, the liability of a natural person surety will expire at the end of ten years from the date of a surety contract. Should the contract provide for a period longer than ten years, the contract will still be enforceable for no longer than ten years, unless it is extended or renewed by duly observing the special written-form requirements identified above. The extension may again be for no longer than ten years, and it should be agreed to no earlier than one year prior to the expiration of the ten-year term of the initial surety contract.

The provisions of the New Code of Obligations pertaining to the special requirements in written form, eligibility for suretyship, and spousal consent will also apply to other forms of personal guarantees to be provided by natural persons. This provision is an attempt to prevent lenders from replacing sureties with guarantors in an effort to avoid the protective measures introduced to strengthen sureties against creditors.

Provisions 581 to 603 of the New Code of Obligations that address surety contracts, self-admittedly, aim to provide protection to sureties against economically superior lenders. These changes seem to restrict the freedom of contract as an instrument of social policy, most notably in the areas of the scope, enforceability and duration of the surety contract.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions