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NEWSLETTER 2011

214

Area of Application

In addition to the above explained provisions, most important

reflection of the provisions regarding the surety agreements to the

contracts law is arising out of Article 603 of NTCO.

This article titled as “Area of Application” states that “the provisions

regarding the formal requirements, legal capacity for being a surety, and

consent of spouse are also applicable for the other agreements titled

differently in which real persons provides personal security.”

Therefore, as per this provision, the above mentioned provisions

of NTCO regarding the form requirements, capacity for being a surety,

and consent of spouse which are mandatory are also applicable for the

guarantee agreements, debt participation agreements, and credit order

(NTCO Art. 516 et seq.).

Guarantee Agreements

Guarantee agreements are the agreements in which the guarantor,

without being subject to the underlying contract, undertakes responsibility

for the performance of the obligor.

A guarantee agreement qualifies as a “third party undertaking”

pursuant to Article 110 of the Turkish Code of Obligations (“TCO”).

Such undertaking obliges the guarantor to be liable for the performance

of the obligor independently from the underlying contractual obligation

and requires the indemnification of the other contracting party (i.e. the

creditor) for its losses occurred as a result of the non-performance of the

underlying contractual obligation.

As per the TCO, a guarantee agreement may be drafted either for a

specific term or an indefinite term. If a guarantee agreement is drafted

for a specific term and the creditor fails to apply to the guarantor for

performance until the expiry of this term, the creditor cannot rely on the

guarantee agreement for payment. In case the guarantee agreement is

drafted for an indefinite period of time, the general statute of limitations

Tandoğan

, a.g.e, s.804.