Contract of Suretyship — The Notarial Question and Conditions of Validity
We explain in detail the conditions of validity of a contract of suretyship under TBK Arts. 581-603, the requirement of the spouse's written consent, the difference between simple and joint and several suretyship, and notarial practice.
A contract of suretyship is an accessory security contract by which the surety undertakes personal liability to the creditor for the consequences of the debtor's failure to perform. Governed in detail in Articles 581-603 of the Turkish Code of Obligations No. 6098, suretyship is one of the security instruments most frequently used in commercial life and in individual credit relationships. The validity of a contract of suretyship is subject to strict formal requirements, and non-compliance renders it absolutely void. This article deals comprehensively with the definition of suretyship, its conditions of validity, the notarial question, the spouse's consent, the difference between simple and joint and several suretyship, and the problems in practice.
Definition and Legal Nature
Suretyship is a contract by which the surety undertakes personal liability to the creditor for the consequences of the debtor's failure to perform (TBK Art. 581). The surety does not “assume” the principal debt; they undertake an accessory security obligation. Their liability is limited to the scope set by statute and to the maximum sum stated in the surety's own handwriting in the contract. The invalidity of the principal debt as a rule affects the suretyship; the exception in TBK Art. 582, where the surety gave the security knowing of the debtor's incapacity or mistake, is nevertheless reserved.
Formal Requirements
Under TBK Art. 583 a suretyship is not valid unless made in writing and unless the maximum amount for which the surety is liable and the date of the suretyship are stated. The surety must write in their own hand the maximum amount for which they are liable, the date of the suretyship and, where they are a joint and several surety, that capacity or an expression of the same meaning. The same form is required for subsequent amendments increasing the surety's liability. Notarial certification is not a condition of validity and does not dispense with the handwriting requirement.
A suretyship may be given for an existing and valid debt; a future or conditional debt may also be secured so as to take effect when it arises. A person who gives security knowing that the principal debt is invalid because of the debtor's incapacity or mistake may be liable under the provisions on suretyship on the conditions in TBK Art. 582.
The Spouse's Written Consent
A married surety must obtain the spouse's written consent before the contract or at the latest at the moment it is concluded, unless a court has ordered separation or a legal right to live apart has arisen. Consent is likewise required for subsequent amendments increasing liability. TBK Art. 584/3 provides limited exceptions for suretyships given in relation to an enterprise or company by the owner of an enterprise registered in the trade registry or by a partner or manager of a commercial company, for professional suretyships by tradespeople and artisans registered in the professional registry, and for certain publicly supported loans; not every suretyship by a partner or manager is automatically excepted.
Simple and Joint and Several Suretyship
In simple suretyship the creditor as a rule must first proceed against the principal debtor and, where there is a pledge delivered as security, must first have recourse to the pledge. Direct recourse to the surety is possible in the exceptions in TBK Art. 585, such as where proceedings against the debtor have been fruitless by reason of bankruptcy or a composition moratorium, where proceedings in Türkiye have become impossible, or where there is manifest insolvency.
Even in joint and several suretyship the creditor cannot in every case proceed directly and unconditionally against the surety. Under TBK Art. 586 the debtor must be in default in performance and a warning must have proved fruitless, or the debtor must be manifestly insolvent. Recourse to the surety before realising a pledge of movables or claims delivered as security likewise depends on the statutory exceptions of anticipated shortfall and insolvency.
Notarial Practice
A notary may attest the elements of identity, capacity, representation, the spouse's consent and the handwriting in a suretyship document; notarial form is not, however, a statutory condition of validity of the suretyship. Whether a notarial document is amenable to enforcement as a judgment depends not on Art. 68 of the Notaries Law but on its being a notarial deed drawn up in official form containing an unconditional admission of a monetary debt within İİK Art. 38. Not every notarially certified suretyship document has the force of a judgment.
Duration of a Suretyship
A suretyship given by a natural person terminates automatically ten years after it is created, unless a shorter period is provided in the contract. A suretyship may be extended for a further period of at most ten years each time, by a written declaration of the surety complying with the statutory form and made at the earliest one year before it expires (TBK Art. 598). In an indefinite-term suretyship the surety may, on the conditions in TBK Art. 601, require the creditor to proceed against the principal debtor within one month and to realise any pledge.
The Surety's Rights and Recourse
To the extent that the surety performs to the creditor, they are subrogated to the creditor's rights and have recourse against the principal debtor. The creditor is obliged to preserve the pledges and evidence from which the surety may benefit and, upon payment, to hand over the documents. Under TBK Art. 589 the surety's maximum liability covers items such as the principal debt, the statutory consequences of the debtor's fault or default, the costs of proceedings and litigation, and one year's accrued and the current year's contractual interest; total liability may not exceed the maximum sum stated in writing.
Termination of a Suretyship
A suretyship may terminate on statutory grounds such as the extinction of the principal debt, the expiry of the term in a fixed-term suretyship, the expiry of the ten-year long-stop period in a natural person's suretyship, and the creditor's failure to take the required steps. Limitation does not extinguish the principal debt of itself; it gives the debtor a defence. The surety may raise the debtor's plea of limitation; it should not be said that “when the debt becomes time-barred the suretyship automatically ends”.
Common Problems in Practice
Various problems frequently arise in the application of contracts of suretyship:
- Missing handwriting: the maximum amount, the date of the suretyship and, where applicable, the capacity of joint and several surety must be written in the surety's own hand in the manner required by TBK Art. 583. The effect of an omission is determined by which element is missing.
- Spouse's consent: whether the consent requirement in TBK Art. 584 or a statutory exception applies is examined as at the moment the contract was concluded.
- Maximum amount: the ceiling of the surety's liability must be determined; a general definition of the debt does not take the place of that handwritten maximum sum.
- Standard forms: a bank's or other creditor's use of a printed form does not dispense with the statutory form. The handwritten elements, the spouse's consent, the type of suretyship and the ceiling of liability are reviewed on the actual document.
Suretyship in the Light of Case Law
In judicial practice, the statement in the surety's own hand of the maximum amount, the date and the intention to give a joint and several suretyship; the giving of the spouse's consent in time and for the specific suretyship; and, in a natural person's suretyship, the ten-year long-stop period and the scope of the surety's liability, are examined in the light of the mandatory provisions. Whether a defect of form affects the whole suretyship or only the capacity of joint and several surety is determined by the missing element and the contract text.
Frequently Asked Questions
Is a notary mandatory for a suretyship?
No. Written form and the handwritten elements in TBK Art. 583 are mandatory.
Can a joint and several surety be pursued immediately?
The conditions in TBK Art. 586 — the debtor's default and a fruitless warning, or manifest insolvency — are required.
Can a natural person's suretyship last more than ten years?
It may be extended by at most ten years each time, by a new suretyship in the proper form made at the earliest one year before expiry.
Can every notarial suretyship document be enforced as a judgment?
No. The conditions of a deed in official form containing an unconditional admission of a monetary debt under İİK Art. 38 are required.
This article was prepared by Av. Mustafa MALGIR.
