Turkey: Supplementary Memorandum about Letters of Guarantee

Last Updated: 25 November 2004
Article by Vural Günal

The sample formats of the letters of guarantee enclosed to our "Memorandum on the Communiqué of the Ministry of Finance About Letters of Guarantee" which was originally issued in January 2003 and then revised upon the General Communiqué, no. 15, of the Republic of Turkey, the Ministry of Finance, the Accountancy General Directorate, published in the 1st Repeated Edition of the Official Gazette on February 20, 2004, have been once more replaced by the text formats published in the Official Gazette on June 08, 2004.

1. The sample formats of:

  • Temporary Letter of Guarantee (Bid Bond)
  • Advance Payment Letter of Guarantee and
  • Final Letter of Guarantee (Performance Bond)

given in the Regulation Amending the Implementation Regulation on Bid Tenders for Purchase of Goods, and

2. the sample formats of:

  • Temporary Letter of Guarantee (Bid Bond)
  • Advance Payment Letter of Guarantee and
  • Final Letter of Guarantee (Performance Bond)

given in the Regulation Amending the Implementation Regulation on Bid Tenders for Purchase of Services

are identical both in form and in contents, and now and therefore, sample formats of these three types of letters of guarantee are enclosed hereto for your information for use if and when required.

Faithfully yours,

 

Vural Günal

Legal Advisor

 

Encl.: Formats of 3 letters of guarantee

*****

TEMPORARY LETTER OF GUARANTEE

(BID BOND)

DATE: _ _ / _ _ / _ _ _ _
NUMBER:......................

Whereas, ............ (name of the bank or special financial institution) stands as a guarantor for payment of the amount of TL ..............1 (amount of the bid bond) of the temporary letter of guarantee which the bidder ........... (name of the Bidder), intending to submit a bid for the project of .................. (name of the project) let for contract by your Administration, is obliged and liable to submit pursuant to the provisions of the bidding documentation and of the 4734 Act;

Now and therefore, we, the undersigned, as the responsible officers and authorized signatories of ........................ (name of the bank or special financial institution) hereby declare, warrant, agree and undertake in the account and name of our bank/special financial institution that if and when the events justifying realization and crediting of the temporary letter of guarantee as income occur within the frame of the provisions of the bidding documentation and the Public Bid Tenders Act 4734, our bank/ special financial institution will pay to your Administration or to its order the above cited amount, together with legal interests to be accrued thereon from the date of demand to the date of actual payment, in cash and in full, without delay and immediately upon your first written demand, without any protest or court judgment or consent of the said bidder and irrespective of any dispute that may arise between the bidder and your Administration and irrespective of the outcomes and legal results thereof.

This Letter of Guarantee will remain valid until .../.../....2 and will become null and void if no written payment demand is received by our bank/special financial institution from you on or before the said date.

If and when this Letter of Guarantee is paid, the Letter of Guarantee amount will be paid to you as ....................3.

(Name of the bank or special financial institution)

......... Branch

(Name of the branch of the issuing bank or special financial institution)

Name, position and signature of the authorized officers of

(Name of the bank or special financial institution)

 

P.S. a) In the letters of guarantee to be issued against a counter-guarantee of foreign banks or similar other foreign crediting institutions, both the name of the foreign bank or crediting institution issuing the counter-guarantee will be given, and it will be stated that the letter of guarantee is based on a counter-guarantee. If the bid/payment currency is Turkish Lira, the letters of guarantee to be issued against a counter-guarantee will also be issued in Turkish Lira.

b) If the article "Currency of Bids and Payments" of the Administrative Specifications allows bidding in foreign currency or foreign currencies, the bidders will issue their letters of guarantee in the bid currency.

*****

FINAL LETTER OF GUARANTEE

(PERFORMANCE BOND)

DATE: _ _ / _ _ / _ _ _ _
NUMBER:......................

Whereas, ............ (name of the bank or special financial institution) stands as a guarantor for payment of the amount of TL ..............4 (amount of the performance bond) of the final letter of guarantee which the contractor ....................... (name of the Contractor), who is awarded the contract for the project of ......................... (name of the project) as a result of the bid tender organized by your Administration, is obliged and liable to submit pursuant to the provisions of the contract and the bidding documentation and the 4734 Act and the 4735 Act;

Now and therefore, we, the undersigned, as the responsible officers and authorized signatories of ....... (name of the bank or special financial institution) hereby declare, warrant, agree and undertake in the account and name of our bank/special financial institution that if and when the Contractor fails to perform all or some of its contractual obligations in accordance with the provisions of the contract and the bidding documentation and the aforementioned Acts, our bank/special financial institution will pay to your Administration the above cited amount, together with legal interests to be accrued thereon from the date of demand to the date of actual payment, in cash and in full, without delay and immediately upon your first written demand, without any protest or court judgment or consent of the said contractor and irrespective of any dispute that may arise between the contractor and your Administration and irrespective of the outcomes and legal results thereof.

This Letter of Guarantee will remain valid until .../.../....5 and will become null and void if no written payment demand is received by our bank/special financial institution from you on or before the said date.

If and when this Letter of Guarantee is paid, the Letter of Guarantee amount will be paid to you as ....................6.

(Name of the bank or special financial institution)

......... Branch

(Name of the branch of the issuing bank or special financial institution)

Name, position and signature of the authorized officers of

(Name of the bank or special financial institution)

P.S. a) In the letters of guarantee to be issued against a counter-guarantee of foreign banks or similar other foreign crediting institutions, both the name of the foreign bank or crediting institution issuing the counter-guarantee will be given, and it will be stated that the letter of guarantee is based on a counter-guarantee. If the bid/payment currency is Turkish Lira, the letters of guarantee to be issued against a counter-guarantee will also be issued in Turkish Lira.

b) If the article "Currency of Bids and Payments" of the Administrative Specifications allows bidding in foreign currency or foreign currencies, the bidders will issue their letters of guarantee in the bid currency.

*****

ADVANCE PAYMENT LETTER OF GUARANTEE

DATE: _ _ / _ _ / _ _ _ _

NUMBER:......................

Whereas, ............. (name of the bank or special financial institution) stands as a guarantor for repayment of the amount of TL ..........7 (amount of the advance payment letter of guarantee) of the advance payment letter of guarantee which the contractor .................. (name of the contractor), being awarded the contract of .................. (name of the contract) as a result of the competitive bidding organized by your Administration, is obliged and liable to submit pursuant to the provisions of the bidding documentation and the contract and of the 4734 Act and the 4735 Act;

Now and therefore, we, the undersigned, as the responsible officers and authorized signatories of ................. (name of the bank/special financial institution) hereby declare, warrant, agree and undertake in the account and name of our bank/special financial institution that if and when this advance sum is required to be repaid to your Administration for any reason whatsoever, our bank/special financial institution will pay to your Administration the above cited amount, together with legal interests to be accrued thereon from the date of demand to the date of actual payment, in cash and in full, without delay and immediately upon your first written demand, without any protest or court judgment or consent of the said contractor and irrespective of any dispute that may arise between the contractor and your Administration and irrespective of the outcomes and legal results thereof.

This Letter of Guarantee becomes effective upon payment of the advance sum and will be valid until .../.../......8 and will become null and void if no written payment demand is received by our bank/special financial institution from you on or before the said date.

If and when this Letter of Guarantee is paid, the Letter of Guarantee amount will be paid to you as ....................9.

(Name of the bank or special financial institution)

......... Branch

(Name of the branch of the issuing bank or special financial institution)

Name, position and signature of the authorized officers of

(Name of the bank or special financial institution)

 

P.S. a) In the letters of guarantee to be issued against a counter-guarantee of foreign banks or similar other foreign crediting institutions, both the name of the foreign bank or crediting institution issuing the counter-guarantee will be given, and it will be stated that the letter of guarantee is based on a counter-guarantee. If the bid/payment currency is Turkish Lira, the letters of guarantee to be issued against a counter-guarantee will also be issued in Turkish Lira.

b) If the article "Currency of Bids and Payments" of the Administrative Specifications allows bidding in foreign currency or foreign currencies, the bidders will issue their letters of guarantee in the bid currency.

Footnotes

1. The relevant currency will be inserted herein in the letters of guarantee in foreign currency.

2. This period will be determined by the bidder, but can in no case be less than 30 days after the end of the validity term of the bid letter pursuant to article 35 of the 4734 Act.

3. The general rule is the payment of the letter of guarantee amount by the issuing bank in the base currency of the letter of guarantee. However, where a letter of guarantee in foreign currency is accepted by the Administration, but nevertheless the letter of guarantee amount can be paid only in Turkish Lira pursuant to the fiscal laws and regulations of the Administration, in this case, it will be clearly stated that the payment will be made over the foreign exchange selling rate of the Central Bank valid and current as of the date of payment.

4. The relevant currency will be inserted herein in the letters of guarantee in foreign currency.

5. This period cannot be less than the period to be determined by the Administration by taking into consideration the date of approval of the final acceptance memorandum in the Bid Tenders for Construction Works pursuant to article 13 of the Act 4735, and in the case of contracts other than the construction works, if a warranty period is specified for the purchased goods or the performed works, the end of the warranty period, and if no warranty period is specified, the work completion date, pursuant to article 35 of the Act 4734.

6. The general rule is the payment of the letter of guarantee amount by the issuing bank in the base currency of the letter of guarantee. However, where a letter of guarantee in foreign currency is accepted by the Administration, but nevertheless the letter of guarantee amount can be paid only in Turkish Lira pursuant to the fiscal laws and regulations of the Administration, in this case, it will be clearly stated that the payment will be made over the foreign exchange selling rate of the Central Bank valid and current as of the date of payment.

7. The relevant currency will be inserted herein in the letters of guarantee in foreign currency.

8. This period must be determined by the Administration by taking into consideration the periods of deduction.

9. The general rule is the payment of the letter of guarantee amount by the issuing bank in the base currency of the letter of guarantee. However, where a letter of guarantee in foreign currency is accepted by the Administration, but nevertheless the letter of guarantee amount can be paid only in Turkish Lira pursuant to the fiscal laws and regulations of the Administration, in this case, it will be clearly stated that the payment will be made over the foreign exchange selling rate of the Central Bank valid and current as of the date of payment.

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.

Authors
 
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
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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.

Disclaimer

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.

General

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