Surety Contract

The surety contract is defined in Article 581 of the Turkish Code of Obligations (TCC) No. 6098. Accordingly, a surety contract is a contract in which the surety undertakes to be personally responsible to the creditor for the consequences of the debtor's failure to fulfill their debt. As can be understood from the definition, although problems such as legal disputes may arise between the creditor, surety and debtor, the parties to the contract are the creditor and the surety, and the main debtor is not a party to the contract.

Thanks to this contract concluded between the creditor and the surety, in case the debtor fails to fulfill their debt, the creditor party can also resort to the surety's assets. Since the surety undertakes such a great responsibility while providing no benefit to themselves, the validity of the surety contract is subject to formal requirements in the TCC.

Conditions of the Surety Contract

Article 584 of the TCC specifies the conditions of the surety contract. According to the provision, a surety contract is not valid unless it is made in written form and the maximum amount for which the surety will be responsible and the date of surety are specified. It is mandatory that the surety indicates in their own handwriting in the surety contract the maximum amount they are responsible for, the date of surety, and in case of being a joint and several surety, that they have undertaken an obligation in this capacity or with any expression meaning this.

The parties may agree to limit the surety's liability to a certain amount of the debt by complying with the written form. Changes made subsequently to the surety contract that increase the surety's liability do not have effect unless the form prescribed for surety is complied with.

Court of Cassation 19th Civil Chamber Decision

In the decision of the Court of Cassation 19th Civil Chamber Case No. 2017/3253 - Decision No. 2019/5052 dated 7.11.2019: "The Regional Court decided to reject the case by accepting the appeal request of the defendant's attorney on the grounds that the credit agreement was dated 06/07/2012, the Turkish Code of Obligations No. 6098 should be applied, the date of surety and the status of being a joint and several surety were not written in the defendant's own handwriting in the contract, the spouse's consent was also not obtained, the surety was invalid, the judgment was appealed by the plaintiff's attorney.

Although the fact that the section of the credit agreement regarding the defendant's surety, which forms the basis of the appeal court's decision, does not comply with the formal requirements written in Article 583 of the Turkish Code of Obligations No. 6098 in force on the date of signature is correct, the defendant has accepted the existence of their surety and that they are a surety both in their objection to the payment order and in their reply petition, and has based their defense on another reason, and has no statement regarding the invalidity of their surety. In this situation, it was appropriate for the first instance court to determine that the plaintiff's claim remained within the defendant's surety limit and decide to accept the case, and the appeal court's decision to cancel the first instance court's decision and make a written decision was not correct, the decision should be reversed for this reason."

On the other hand, pursuant to Article 584 of the Turkish Code of Obligations (TCC), the validity of a surety contract made by a person who was married at the time of surety is, as a rule, subject to the written consent of their spouse. Therefore, a surety contract concluded without the spouse's consent will be invalid. Thanks to this provision, surety contracts that are unknown until the payment date or until the death of the surety spouse and may worsen the situation of the other spouse will be prevented.

Types of Surety Contract

The types of surety contract are specified in the TCC. Accordingly, the surety contract can be in the following forms:

Simple Surety
Joint and Several Surety
Co-Surety
Surety for Surety
Recourse Surety

Termination of Surety

The termination of surety is regulated in Article 598 et seq. of the TCC. Surety can terminate in 4 ways:

By law
By withdrawal from surety
Time-limited surety
Non-time-limited surety

Termination by Law

By law, for whatever reason the main debt ends, the surety is also released from their debt. Any surety given by a natural person automatically ceases to exist upon the passage of ten years from the establishment of the relevant contract. If surety is given for a period longer than ten years, the surety can only be pursued until the ten-year period expires, unless the surety has been extended or a new surety has been given. Therefore, the ten-year period here indicates the maximum pursuit time that can be given at one time.

Withdrawal from Surety

Withdrawal from surety is a termination situation that is more concerned with the surety's current economic situation. Namely, in surety for a debt that will arise in the future, if the debtor's financial situation before the debt arises has significantly deteriorated after the surety contract was made, if it turns out to be much worse than the surety assumed in good faith during the surety, the surety can withdraw from the surety contract at any time as long as the debt is not due, provided that they notify the creditor in writing.

In addition, the surety is obliged to remedy the damage suffered by the creditor due to relying on the surety.

Time-Limited Surety

In time-limited surety, the surety is released from their debt at the end of the period.

Conclusion

The surety contract is an important security instrument in which the surety is responsible for the consequences of the debtor's failure to fulfill their debt. For the validity of the contract, conditions such as the written form requirement, specification of the maximum amount and date of surety, and obtaining spouse's consent for married persons must be fulfilled. The surety contract can be of various types and can terminate in different ways.