A check is a negotiable instrument commonly used to order a payment of money from a bank (usually from the checking account of the check drawer). They come in handy for making instant payments in place of cash. Checks are widely embraced in Turkey for a variety of reasons that do not necessarily include instant payments, however. This article addresses the legal and practical ramifications of drawing post-dated and bad checks in Turkey, in light of the recently-amended legislation.
A check is only as good as the account balance that underlies it; after all, it is not a banknote. Thus, the very nature of checks makes it easy for dishonest or insolvent drawers to manipulate them. The drawing of bad checks is rampant enough for the legislature to have felt the need to step in and regulate this area with a specific law.
In order to prevent manipulative usage of checks, to regulate drawers' liabilities and holders' rights, Turkey passed a law in 1985 that remained in force until 2009.1 This law was replaced by the Law on Checks No. 5941, in 2009 (the "Law on Checks").2 The importance surrounding this issue prompted debates since the enactment of the original law, and continued with fresh enthusiasm under the new Law on Checks. This year has realized various amendments3 to the current law. We discuss below some of the noteworthy consequences of issuing bad checks within the framework of the Law on Checks.
Liability of Bad-Check Drawers
Liability of bad-check drawers is regulated under Article 5 of the Law on Checks. Contrary to common understanding, even before the new amendments came into force in 2012, direct imprisonment was not imposed. Instead, a criminal pecuniary fine was imposed if one tendered a bad (or dishonored) check. This fine corresponded to a maximum of 1,500 days' prison time, and was converted into a fine that was not less than the value of the check. The penalty of imprisonment was only imposed if the bad-check drawer failed to pay the pecuniary fine. Of course, this liability was criminal in nature, and bad-check drawers were tried before criminal courts.
In addition, the judge was able to issue preventive measures, such as to prohibit the accused from issuing checks and from opening checking accounts, pending the trial.
With the recent amendments, criminal liability is completely repealed. The only sanctions remaining are administrative prohibitions of issuing checks and opening checking accounts. Also, a time limitation is imposed upon bad-check holders in which to claim relief.
A bad-check holder may file a claim with the competent public prosecutors within 6 months, starting from the date that the bad check was submitted to the bank. Public prosecutors will decide whether or not to prohibit the relevant bad-check drawer. As such, the liability is administrative in nature. Therefore, the risk of accepting checks will certainly increase, now that criminal liability is history. One man's feast is another man's poison, of course – or with respect to this particular subject, it is the other way around! This decriminalization was highly welcomed by supporters of the liberal economy, since it is considered to be against a merchant's commercial rights to be criminally penalized for failing to honor his/her checks.
Frankly, however, these amendments mainly intend to decrease the heavy workload of the judiciary, rather than serving some policy agenda. In line with this intention –and the fundamental criminal law principle of applying less stringent criminal laws retroactively– all ongoing investigations and trials regarding dishonored checks will be halted.4 The competent authority shall proceed with the newly-introduced administrative sanction for pending files. In the investigation stage, this authority is the public prosecutor, and in the prosecution stage, it is the competent criminal court. If the file is before the Court of Appeals, it shall be sent back to the first instance court, which shall then rule upon the administrative sanction. This mechanism appears convenient in theory; however, in reality, because of the high volume of bad check cases, this process may take months - even up to a year.
The administrative liability regulated by the new amendments is easy to wriggle out of. The prohibition applied to bad-check drawers will be lifted if the entire amount, with interest, is paid. The check-holder should inform the competent public prosecutor who will then lift the prohibition.
One should note that while drawing a bad check per se is no longer a type of crime, fraud and forgery continue to be separate criminal acts specifically sanctioned. Hence, if drawing a bad check can be proven to be an act of fraud or forgery, the Turkish Criminal Code's general penalties may still be invoked.
As referred to earlier in this article, one of the idiosyncratic practices in Turkish commercial transactions is the drawing of a post-dated check. A check, by nature, is a payment instrument. Post-dated checks, however, serve as a payment security or collateral, in practice. Until the recent amendments, it was possible to press criminal charges when a post-dated check, presented for payment before the date noted thereon, "bounced." The logic behind this was that a check – unlike a promissory note for instance – cannot be post-dated. It should circulate just like a banknote, carrying the promise of payment immediately, and post-dating contradicts the very raison d'être of a check. With the new law, no liability will arise from a bad check that is submitted to a bank prior to the date it bears.
Having said this, the new legislation also recognizes that the practice of post-dating checks is contrary to the nature of check usage.5 Yet, the time period for the issuance of post-dated checks is now extended to 31 December 2017, from 31 December 2011.
Clearly, this extension was prompted by the practical need to use post-dated checks in commercial operations. Countering this very need, the lawmaker's aim in regulating post-dated checks, it appears, is to keep this practice among merchants under control and within legal boundaries.
1 Law on the Regulation of Check Payments and Protection of Check-Holders No. 3167.
2 Came into force on 14 December 2009.
3 Passed into law effective 3 February 2012, under Law No. 6273.
4 See, paragraph 7 of Temporary Article 3 of Law on Checks.
5 See paragraph 5 of Temporary Article 3 of the Law on Checks.
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.