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LAW OF OBLIGATIONS 247
Letters of guarantee that do not include an expiration date do not have
a term of validity and remain in effect indefinitely. The issuer is liable for
the risk starting as of the date of realization of the risk until the end of
the term of prescription. Liability arising from a letter of guarantee which
does not include an expiration date shall begin at the date of maturity
which is the date of the realization of the risk. If the date of realization
of the risk, and therefore the date of maturity, cannot be determined and
more than ten years has passed as of the date of issuance, the issuer may
object on the grounds of prescription. If the guarantee objects, the date of
the realization of the risk shall be proven by the issuer 1.
It should be noted that pursuant to Art. 26 of State Procurement Law
No. 2886, letters of guarantee provided for works that fall within the
scope of said law shall not include an expiration date.
Where letters of guarantee include a date of expiration, the letter of
guarantee shall be terminated if the risk is not realized or demand for
compensation is not made within the period of expiration.
The Court of Appeals accepts within its jurisprudence that payment
may be demanded during the ten year prescription period if it is proven
that the risk was realized within the term of expiration. Art. 128, par. 2 of
the new CO, which corresponds to Art. 110, par. 2 of old CO sets forth
that in agreements for the undertaking of a third party’s action, clauses
stating that the agreement shall become invalid if a written demand of
payment is not made to the guarantor within the expiration term shall be
valid. The Court of Appeals applies this rule. Therefore, in order for a
letter of guarantee including an expiration date to actually become invalid
at the end of its term, it must include specific wording stating that it shall
become invalid if a written demand of compensation is not made within
the term. However, it must be noted that wording only stating that the
demand for compensation must be made within the term of the letter of
1 Seza Reisoğlu, Banka Teminat Mektupları Uygulamalarında Ortaya Çıkan Başlıca Sorunlar,
Türkiye Bankalar Birliği,
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