Payment process of letters of guarantee

The need to guarantee and fulfill obligations arising from national and international commercial contracts in a globalizing world have led to frequent use of letters of guarantee. Bank letters of guarantee can be defined as the revocable undertaking of the bank issued at the request of the applicant in favor of the beneficiary, guaranteeing a certain amount of payment in case of failure of the applicant to fulfill his/her obligations. Bank letters of guarantee are widely used in the commercial world as they are reliable, easily obtainable and convertible into money. Despite this, there is no separate and special regulation regarding the law to be applied resulting in a legal gap The existing legal framework is based on the decisions of the Supreme Court of Appeals handed down in 1967 and 1969, which accepted bank letters of guarantee as a contract of guarantee. In the thesis, we assume bank letters of guarantee as a contract of guarantee in line with the case law of the Supreme Court of Appeals and examine the components of the bank letters of guarantee, their parties, their validity conditions, the establishment and types of the contract, the request of payment, the basis for the rejection of the request of payment and the objections of the payment difficulty of the parties on the payment process of the bank letters of guarantee within the framework of contract of guarantee. Bank letters of guarantee continue to be widely used in commercial practice. Therefore, there is a need for special legal arrangements clarifying the law that will be applied in the use of bank letters of guarantee. Keywords: Letter of guarantee, payment process, beneficiary, drawee.