Guarantee Agreement within the Framework of the Turkish Code of Obligations

1. Introduction

A suretyship agreement is a contract in which the guarantor assumes personal liability to the creditor for the consequences of the debtor's failure to fulfill its obligations. This contract provides security for the creditor and creates personal liability for the guarantor. Under Turkish Code of Obligations No. 6098, suretyship is subject to strict requirements regarding form and content, distinguishing it from other contracts that create obligations. This approach by the legislator aims to both protect the guarantor's financial future and ensure the continuity of family unity.

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2. Conditions of the Guarantee Agreement (TCO Art. 582, 583)

According to Article 582 of the TCC, a suretyship agreement may be made for an existing and valid debt. However, in the case of a debt that is likely to arise in the future or a conditional debt, a suretyship agreement may be entered into to take effect at the time the debt arises or when the condition is met.

Article 583 of the Turkish Code of Obligations (TBK) regulates the requirement for a qualified written form for the validity of a suretyship agreement. A suretyship agreement is not valid unless it is made in writing and specifies the maximum amount for which the guarantor will be liable and the date of the guarantee. The guarantor must state in the suretyship agreement, in his or her own handwriting, the maximum amount for which the guarantor will be liable, the date of the guarantee, and, if he or she is a joint guarantor, the fact that he or she is obligated in this capacity or through any expression of this meaning. In summary, for a legally valid suretyship agreement to be valid , all the following formal requirements must be met:

• The contract must be made in writing ,

• The maximum amount for which the guarantor will be responsible,

• The history of bail ,

• The title of joint guarantee is written by the guarantor in his own handwriting .

It should be noted that subsequent amendments to the suretyship agreement that increase the guarantor's liability will not be effective unless the conditions and form specified above for the guarantee are met. Therefore, amendments to the suretyship agreement that increase liability and are not written in the guarantor's own handwriting will not be effective against the guarantor.

The Supreme Court meticulously monitors compliance with the formal requirements of the surety agreement and, in case of any discrepancy, considers the agreement null and void;

Article 583 of the TCC, which regulates the formal requirements for suretyship agreements, states, "A suretyship agreement is not valid unless it is made in writing and the maximum amount for which the guarantor is liable and the date of suretyship are specified. The guarantor must state in the suretyship agreement, in his or her own handwriting, the maximum amount for which he or she is liable, the date of suretyship, and, if he or she is a joint guarantor, the fact that he or she is liable in this capacity or under any expression of this meaning." There is no handwritten statement in the lease agreement between the parties regarding the maximum amount for which the guarantor is liable and the date of suretyship. Therefore , a suretyship agreement executed without complying with the formal requirements specified in Article 583 of the TCC is invalid. Therefore, while the court should have dismissed the lawsuit against the defendant guarantor... on this basis, it is incorrect to dismiss the lawsuit in writing on the grounds that this case requires litigation."

— Supreme Court of Appeals 6th HD, 2015/11952 E. 2016/5123 K.

“…In the present case, since the lease agreement concerning the suretyship of the defendant ... was signed after the entry into force of the TCC No. 6098, the formal requirements of the suretyship are subject to the provisions of the TCC No. 6098. Since the amount for which the guarantor is responsible, the date of the guarantee, and the explanations regarding his being a joint guarantor are not stated in the guarantor's handwriting in the lease agreement, and since there is no suretyship given in accordance with the legal form, it is not possible to hold the defendant liable for the debt. Therefore, while the lawsuit against the defendant ... should have been dismissed, it is not correct to make a written decision.”

— Supreme Court of Appeals 6th HD, 2016/1902 E. 2016/2446 K.

In this regard, in accordance with the established jurisprudence of the Supreme Court, the conditions stipulated in Article 583 of the TCC are "conditions of validity" and contracts contrary to them are void from the outset.

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3. Spouse's Consent in the Guarantee Agreement (Article 584 of the TCC)

Another issue that needs to be examined in suretyship agreements is the covenant of married individuals. The formal requirement determined by the legislature in this regard is the written consent of the spouse for married covenants. According to Article 584 of the Turkish Code of Obligations, unless a court has issued a separation order or the right to live separately arises by law, a spouse can only act as covenant with the written consent of the other spouse. This consent must be given before, or at the latest, at the time of, the conclusion of the contract.

In addition, the Supreme Court also accepts that spousal consent will be required for subsequent amendments that increase the liability of the guarantor, but this condition is not required for amendments that reduce liability or are in favor of the guarantor:

“…In the present case, it appears that on August 3, 2012, in the absence of the debtors, GK, the spouse of the debtor B., and SS, the spouse acted as enforcement guarantor for the debts of SS, the spouse B., and the other debtor, and that the relevant minutes were signed by the creditor's attorney and the enforcement guarantor. Pursuant to Article 584 of the Turkish Code of Obligations No. 6098, any guarantee given by the guarantor for his spouse without his spouse's consent is invalid. The situation stipulated in paragraph 2 of the aforementioned article does not exist, and the guarantee given for the spouse does not prevent the fulfillment of the legal formal requirements. Therefore, while the court should have accepted the complaint in its entirety and ruled to annul the guarantee given by GK, the spouse of the debtor B.K., without his spouse's consent, due to the lack of a formal requirement, rendering a judgment based on written justification is inappropriate.”

— Supreme Court 12th HD, 2012/32781 E. 2013/10544 K.

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5. Conclusion

Surety agreements are subject to strict formal requirements under the TCC, and in this respect, they aim to protect the guarantor, the family, and the family economy. Consequently, the provisions of the TCC and the current jurisprudence of the Court of Cassation should be considered together in the application of surety agreements. The formality and consent requirements must be meticulously adhered to when establishing the agreement. If acting as guarantor for a third party's debt, seeking legal assistance will prevent loss of rights.