What is a Guarantee Promissory Note?
A promissory note that is issued between parties to ensure that the goods or services agreed upon will be fully and properly delivered, and that all commitments will be fulfilled without issue, is called a guarantee promissory note. It states that if the obligations are not met, the party who fails to fulfill them will be liable to pay a certain amount.
In the event of a dispute, the party claiming that the promissory note is a guarantee note bears the burden of proof. The statement “This is a guarantee promissory note” written on the note alone is not sufficient. In its decision dated 20.09.2011, the 12th Civil Chamber of the Court of Cassation ruled: “Merely stating ‘guarantee promissory note’ on a promissory note does not prevent legal proceedings specific to negotiable instruments from being carried out.” The note must clearly specify from which agreement or legal relationship the guarantee obligation arises.
In its decision numbered 2016/15030 E. and 2017/7000 K., the 19th Civil Chamber of the Court of Cassation ruled: “The case was dismissed on the grounds that there was no written evidence proving that the check was a guarantee check.” Guarantee notes or checks cannot be proven by witness testimony. As emphasized in other Court of Cassation decisions, the nature of a guarantee note or check can only be proven through written evidence.
The competent court in matters related to guarantee promissory notes is determined based on the nature of the main debt relationship. In commercial agreements, Commercial Courts are competent; in lease agreements, Civil Courts of Peace; and in consumer-related matters, Consumer Courts.
If it is clearly understood from the text of the note that it is a guarantee promissory note, the note loses its character as a negotiable instrument. Negotiable instruments are governed by the Turkish Commercial Code and must comply with mandatory formal requirements. However, no mandatory form requirements are prescribed for guarantee promissory notes.
Guarantee Promissory Notes Obtained Through Lease Agreements
As mentioned above, a guarantee promissory note is a document that serves as a security to ensure that the commitments made between the contracting parties are fully fulfilled. In practice, guarantee promissory notes may be issued between property owners and tenants as security for rental payments or potential damages to the leased property. What must be carefully noted here is that the guarantee promissory note should clearly contain sufficient information indicating that it arises from the rental relationship between the parties and specify under which contract it was prepared.
Guarantee promissory notes serve as security. However, in some cases, landlords misuse these notes beyond their intended purpose. They may unjustly initiate enforcement proceedings against tenants, putting them in difficult situations and demanding additional payments despite the rent already having been paid. It is the tenant’s responsibility to prove that the given promissory note is indeed a guarantee note. Tenants who provide a guarantee promissory note must make a reference to the note in the rental agreement.
Indeed, the 19th Civil Chamber of the Court of Cassation, in its decision numbered 2009/12076 E. and 2010/8179 K., ruled: “Although the court concluded that the promissory note was a guarantee note based on the rental agreement between the parties, the rental contract contains no provision regarding the disputed note. Therefore, it is not correct to accept the rental agreement as proof of the guarantee claim.”
Similarly, the 6th Civil Chamber of the Court of Cassation, in its decision numbered 2014/1530 E. and 2014/11959 K., ruled: “The promissory note dated 08.03.2011 with a maturity date of 28.03.2011 and a value of 6,400 TL does not contain any statement indicating that it was given as a guarantee promissory note under the rental agreement. However, based on the defendant’s attorney’s statement, it was accepted that the note was given for guarantee purposes. In this case, the defendant creditor should be allowed to prove, with legal evidence, the debt and amount secured by the note arising from the damage caused. The court should have given the defendant the opportunity to present evidence to prove their claim and made a decision accordingly; therefore, it was incorrect to establish a ruling with incomplete examination.”
Guarantee Promissory Notes Given Together with Car Rental Agreements
Rent-a-Car companies require individuals who rent vehicles from them to sign a guarantee promissory note along with the Rent-a-Car agreement. The purpose here is for the company to secure itself in case the vehicle is involved in any accident. Renters must be cautious in this regard. The relevant contract should explicitly reference the guarantee promissory note, and it should clearly state under which contract the note was signed. Otherwise, the guarantee promissory note signed during the vehicle rental process could be endorsed to another party and subjected to enforcement proceedings, causing the signer to be unjustly held liable. The debtor who cannot prove in writing that the note is a guarantee promissory note must bear the burden of the note. The burden of proving that the note is a guarantee promissory note lies with the debtor.
Regarding this matter, the Turkish Court of Cassation (Yargıtay), 6th Civil Chamber, in decision no. 2014/8462 (file no. 2014/12232) ruled:
“When examining the promissory note subject to enforcement, it is understood that it was issued in cash. The defendant argued that the promissory note was issued as a loan to R. Y. from the plaintiffs, and the defendant did not dispute the reason for issuing the promissory note. In this case, the burden of proof lies with the plaintiff, and the plaintiffs must prove their claims against the promissory note (the claim of lack of consideration) with written evidence of equal strength.”
Similarly, in the Turkish Court of Cassation, 19th Civil Chamber, decision no. 2015/15953 (file no. 2016/4211), it was ruled:
“According to the evidence collected and the forensic medical report, the promissory note was issued as an annex to the vehicle rental agreement. Since the defendant failed to prove that the note was given based on a valid legal relationship, the case was accepted, and compensation was awarded. The decision, which is in accordance with procedural law and substantive law, should be upheld.”
Guarantee Promissory Notes in Commercial Relationships
In commercial transactions involving the purchase and sale of goods and/or services, the parties may sign a guarantee promissory note or check to secure the agreement, commitments, and promises made between them during the fulfillment of the goods or services. If the delivery of the goods or services does not occur as agreed, the note can be enforced to recover damages. Additionally, parties engaged in commercial relationships must pay attention to matters concerning the guarantee promissory note/check. It must be clearly stated which contract the guarantee note is based on, and the relevant contract should reference the guarantee note. The burden of proof that the note is a guarantee promissory note lies with the debtor. Proof that the note is a guarantee promissory note can only be made with written evidence.
In the decision numbered 2018/2358 Principal and 2019/5012 Decision of the 19th Civil Chamber of the Court of Cassation, it was ruled:
“According to the trial conducted in the first instance court, the collected evidence, and the expert report adopted, there is a commercial relationship between the plaintiff and the defendant. The note given by the plaintiff to the defendant is recorded in the commercial books and documents of the defendant company. A deduction of 250,000.00 TL was made from the defendant’s receivable from the plaintiff due to the said note. Although the plaintiff claimed that the note is a guarantee promissory note, there is no explanation on the note or in the note text indicating for which business the note was given as a guarantee. Moreover, the examination of the defendant’s books shows that the defendant has receivables exceeding the amount of the note. Even if the note has not yet been collected, it was offset from the plaintiff’s debt and recorded in the commercial books and documents in this way. Therefore, the plaintiff has failed to prove that the note is a guarantee promissory note, and it is understood that the plaintiff’s debt exceeds this amount. For these reasons, the case was dismissed, and the plaintiff’s attorney appealed the decision. (…) Considering the writings in the file, the evidence on which the decision is based, the justifying reasons, and the absence of an error in the evaluation of the evidence, all the plaintiff’s unsubstantiated appeals are rejected, and the judgment, found to be in accordance with procedural and substantive law, is UPHELD, and the file is sent back to the first instance court.”
ANTALYA COMMERCIAL LAWYER – ANTALYA ENFORCEMENT LAWYER
As seen, in cases where guarantee promissory notes are attempted to be collected despite payment being made, presenting bank receipts, invoices, and payment receipts is extremely important for proving the payment. To prevent victimization and loss of rights, it is crucial that these procedures are conducted with the assistance of an experienced lawyer. Our law office provides professional follow-up and assistance services related to this matter. If you have any questions or issues regarding the topic, please feel free to contact us.
