Suretyship

Also known as: Surety, Personal Guarantee, Joint and Several Suretyship, Simple Suretyship, Kefalet, TCO Article 581

In short

A contract subject to strict formal requirements by which the surety undertakes personal liability to the creditor for the consequences of the debtor's failure to perform.

Suretyship is a form of personal security: if the debtor fails to pay, the surety pays from its own assets. Because of its serious consequences, the Turkish Code of Obligations subjects suretyship to strict formal requirements (TCO Article 581 et seq.).

Formal Requirements (TCO Article 583)

The contract must be in writing.
The maximum amount of the surety’s liability and the date of the suretyship must be stated.
The surety must write the maximum amount, the date and, for joint and several suretyship, that capacity in its own handwriting.
Later amendments increasing the surety’s liability are subject to the same form.

Suretyship cannot be given by secure electronic signature, since security agreements are generally excluded; see Electronic Signature.

Spousal Consent (TCO Article 584)

A married person may act as surety only with the written consent of their spouse, unless a court has ordered separation or a legal right to live apart has arisen. Consent must be given before or at the latest at the time of conclusion. Exceptions: suretyships given by owners of registered businesses or shareholders or managers of companies in connection with the business or company, by tradespeople in connection with their professional activity, and for certain publicly supported loans listed in the law.

Types

Simple suretyship: The creditor must first proceed against the debtor; the surety generally cannot be compelled to pay until enforcement against the debtor has failed.
Joint and several suretyship: The creditor may proceed directly against the surety without first pursuing the debtor (under statutory conditions). This is the type commonly used in banking.

Termination

When the main debt is extinguished, the suretyship ends (TCO Article 598(1)).
Any suretyship given by an individual lapses automatically ten years after conclusion. The surety may extend it for a new period of up to ten years by a written declaration in the same form, made at the earliest one year before expiry (TCO Article 598(3)-(5)).

Other Forms of Security

A contract of guarantee is independent of the main debt. A letter of guarantee is a guarantee issued by a bank. An aval on negotiable instruments is not subject to the formal requirements of suretyship; see Promissory Note.

Frequently Asked Questions

What happens if the maximum amount is not stated?

The suretyship is void. The maximum amount for which the surety is liable and the date must be stated, and the surety must write these — and, for a joint and several suretyship, that capacity — in its own handwriting (TCO Article 583(1)).

Can a company shareholder act as surety for the company's debt without spousal consent?

Yes. Spousal consent is not required for suretyships given by the owner of a business registered in the trade registry, or by a shareholder or manager of a commercial company, in connection with that business or company (TCO Article 584(3)).

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