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LAW OF OBLIGATIONS
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set forth in Article 125 of the TCO, which is ten years commencing from
the date on which the debt becomes due will be applicable.
As per Article 128 of NTCO, “the one who undertakes a third party’s
obligation in favour of the other party is liable to indemnify the damages
arising out of the non-performance of this obligation”. As is seen the “third
party undertaking” institution on which the guarantee agreements are
based does not set forth differently in the NTCO. In addition, applicable
statute for limitation is not changed.
However, as stated above, since the area of application of the provisions
on surety agreements is expanded, qualified formal requirements, legal
capacity provision and the provision regarding the consent of spouse will
apply to the guarantee agreements.
Distinguishing Surety Agreements from Guarantee Agreements
The major criteria for distinguishing surety agreements from
guarantee agreements are as follows in below:
a) Primary- Ancillary and Secondary Obligation:
The most notable
difference between a surety agreement and a guarantee agreement is
that; while surety imposes an ancillary and (depending on the type)
secondary obligation for performance, a guaranty imposes a primary
and independent obligation. Under a surety agreement, the surety shall
be held liable only if the underlying contractual relation, is valid and
enforceable. According to Article 492 of the TCO, “
in case of termination
of the underlying
contractual
relation, surety will be exonerated from his
obligation for performance”.
Whereas obligation of the guarantor has an
independent nature, by being separate from the underlying contractual
relation between the main obligor and the creditor. In this respect, the
guaranty undertaking (agreement) shall continue to have effect even
when the underlying contractual relation between the creditor and the
obligor becomes invalid, thus the guarantor shall remain liable against
the creditor for performance of the guarantee undertaking. In other words,
when reimbursing the creditor, the guarantor would be fulfilling its own
obligation arising out of the guarantee agreement, but not the obligation
of the obligor arising from the underlying relation.