The Guarantee Institution

In this study, the guarantee institution, which is regulated in Turkish Commercial Code Article 700 to 702, was examined in terms of the material and formal requirements, legal qualifications and the responsibility and rights of the guarantor. The guarantee offers a comprehensive frame work that requires addressing all the institutions of commercial bills law. At the same time, the guarantee is stil used in practice since the surety phrase imprinted on the commercial bill, is accepted as a guarantee by the Supreme Court, a sole signature put on the front of the bill is regarded as a guarantee and guarantee is also used in the forfaiting transaction. The following conclusions regarding the guarantee institution have been reached after a detailed analysis of the jurisprudence and doctrine: The guarantee is a special type of commercial bill commitment for the purpose of ensuring the payment of a bill, as to the whole or part of its amount. The guarantee is subject to both the general rules relating to commercial bills and the special provisions relating to guarantee. The guarantee relationship between the guarantor and the person to whom the guarantee is given, affects the legal consequences arising from the guarantee differentiates it from other commercial bill commitments. On the other hand, the afore-mentioned relationship does not make the guarantee a subtype of the surety agreement; on the contrary, both the surety agreements and guarantee are sub-types of legal transactions towards providing personal guarantee. Nevertheless, the guarantee is a unilateral legal transaction. Indeed, the guarantee is executed by putting a signature on the commercial bill or allonge by the guarantoror his authorized representative. The legal consequence of the guarantee being a warranty attached to the monetary claim is that the guarantor may raise the personal defences of the person for whom he has become a guarantor against the bearer of the bill. Finally, the guarantor is under recourse liability regardless of in whose favor he has given the guarantee. Therefore, the bearer must have the right of recourse in order demand payment from the guarantor.