Bank guarantee letters in Turkish Law

Depending on the sophisticated national and international trade transactions in today's global world, there is need to guarantee payments and fulfilments of obligations arising from contracts. In this sense, the bank letter of guarantee has an important role, because it serves to secure an obligation in a contract. Bank letters of guarantee can be defined as the irrevocable 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 applicant. Since the bank letters of guarantee is not specifically regulated by the laws in Turkey; the elements, the characteristics and the legal consequences of it have been shaped over the years by the decisions of the Court of Appeal and the needs of practise. Although the legal characteristic of bank letters of guarantee has been subject to discussions due to the absence of regulation, it is widely accepted as a guarantee agreement. This is mainly because of the Court of Appeals' decisions. This study aims to analyze the controversial issues on the bank letter of guarantee by considering the decisions of the Court of Appeal and various opinions in academia. Keywords: Letter of guarantee, beneficiary, guarantor, counter guarantee.