Türkçe
Surety and guarantee contracts, which are the two most commonly used methods to secure receivables, are often confused as both contain personal guarantees. However, it is important to distinguish these two types of contracts, since both the validity conditions of the same and the assurances that they provide are different.
The main elements that distinguish between guarantee contracts and surety agreements may be summarized as follows.
From of Contract
In accordance with Article 583 of the Turkish Code of Obligations (“TCO”), in order for a surety agreement to be valid, it must be executed in writing and the maximum amount and date of the surety must be specified with the handwriting of the surety. Further; in accordance with article 584 of TCO, if the surety is married, the written consent of the spouse must be obtained for the surety to be valid.
However; no formal requirement is stipulated under the TCO regarding the execution of guarantee agreements. Therefore; the parties may freely determine the conditions of the guarantee agreements within the scope of freedom of contract. Having said that; pursuant to Article 603 of the TCO, the provisions regarding the form of surety, the capacity to be a surety and the consent of the spouse will also be applied to guarantee agreements to be concluded by real persons in order for such agreements to be valid.
Nature of Obligation
The most important difference that distinguishes surety agreements from guarantee agreements is the nature of the liability of guarantee providers. Although the liability of the surety under the surety agreement is tied to the principal obligation, the obligation undertaken by the guarantor under the guarantee agreement is independent of the original contract.
While the debt of the surety depends on the existence of the debt arising from the original contract and terminates when the original debt expires, the debt of the guarantor under the guarantee agreement, as a principle, does not depend on the existence of the debt under the original contract and unless otherwise agreed, the responsibility of the guarantor will continue even if the debt under the original contract is invalid or expired.
Right of Plea and Opposition
In the surety agreement, the surety has the right to assert the pleas of the principal debtor against the creditor. However, in the guarantee agreement, the guarantors cannot assert the pleas of the principal debtor against the creditor, since the debt of the guarantor under the guarantee agreement is independent of the original debt. Further; although it depends on the type of surety agreement, as a principle, the surety has the right to request from the creditor to pursue debt collection procedures against the original debtor before requesting for the performance of its debt under surety agreement. However; since the debt undertaken by the guarantor is an independent debt, the guarantor does not have such a right.
Scope of Liability
In accordance with Article 589 of the TCO; the surety is liable up to the maximum amount specified under the surety agreement. Unless otherwise agreed in the contract, the surety is liable, limited to the maximum amount specified, for (i) the principal debt and legal consequences of the debtor’s fault or default, (ii) the costs of debt collection and litigation procedures and (iii) the contractual interest accrued for one year and the year in progress. Unless it is not clearly agreed under the contract, the surety is only responsible for the debts of the debtor which arise after the establishment of the surety agreement. Agreements stating that the surety will be liable for the damages caused by the nullity of the principal debt relationship and the penalty clause are null and void.
However; there are no such restrictions regarding the scope of the guarantee agreements and the parties may freely determine the scope of the guarantor’s liability in accordance with the freedom of contract. Therefore; in a guarantee contract, it is possible to regulate that the guarantor undertakes more than the original debt, agrees to pay the losses incurred due to the nullity of the principal debt relationship and even the penalty amounts.
Subrogation
Pursuant to Article 596 of TCO; the surety becomes the successor to the rights of the principal debtor to the extent that the surety compensates the creditor. As can be seen; under the TCO, the surety has been given the right of recourse to the main debtor. Under the guarantee agreement, if the parties have not made a special arrangement on this issue, the guarantor will not have the right to recourse to the principal debtor.
The Right of the Surety to Compel the Creditor to Accept the Execution of the Debt or to Release the Surety from his Obligations
In accordance with Articles 593 and 601 of the TCO; the surety may always compel the creditor to accept the performance of the debt and to release the surety from his obligations. If the creditor does not accept the performance, the surety is relieved from his liabilities. However, the guarantor has not been granted such a right under the law.
The differences mentioned above may differ depending on the type of surety agreement concluded, the nature of the guarantor, whether he is a real person or legal person, and the characteristics of the situation. Therefore; at the stage of collateralizing a debt, it is of great importance to consider the characteristics of each situation separately and to determine the most appropriate collateral method in this way.
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