The cheque, which finds an extremely wide field of application in commercial relationships, must carry a number of mandatory elements set out in the Turkish Commercial Code No. 6102. Because it is commercial paper representing money, the legislature has made this instrument subject to strict formal rules. Under Article 781 of the Turkish Commercial Code No. 6102, a document that does not contain the mandatory elements required by the Act cannot be regarded as commercial paper having the quality of a cheque.
Since very grave legal consequences attach to the absence of these elements, knowing which entries are required is of great importance. Nor is the matter regulated in the Turkish Commercial Code No. 6102 alone; the Cheque Act No. 5941 also contains provisions on the entries that must appear on the instrument. In this study we carry out a separate examination in respect of each of the two statutes.
The cheque is perhaps the most frequently used means of payment in commercial life. Its widespread use does not, however, mean that in practice the elements required by the Act for a valid instrument are fully complied with. Documents that do not bear the quality of a cheque because they have been drawn up contrary to the required form are the source of a great many disputes. For that reason, knowledge of the mandatory elements of the instrument carries a particular importance.
Mandatory Elements Required by the Turkish Commercial Code
The mandatory elements of the instrument are listed in Article 780 of the Turkish Commercial Code No. 6102:
Turkish Commercial Code No. 6102, Art. 780
"A cheque contains:
a) the word "cheque" in the text of the instrument and, if the instrument is written in a language other than Turkish, the word used in that language as the equivalent of "cheque",
b) an unconditional order for the payment of a definite sum,
c) the trade name of the person who is to pay, the "drawee",
d) the place of payment,
e) the date and place of issue,
f) the signature of the drawer,
g) the serial number given by the bank,
h) the QR code."
The Word "Cheque"
The word "cheque" must have been included within the text of the instrument. Where the text has been drawn up in a foreign language, the word used in that language as the equivalent of cheque must appear in the text of the instrument.
Unconditional Order to Pay
The order for the payment of a definite sum must appear in the text of the instrument without being made subject to any entry or condition. In practice this order is expressed by the words "pay".
By the express wording of the statutory text, the order must be unconditional. Making payment subject to a condition results in the invalidity of the instrument. That quality of the order also precludes the inclusion of an interest stipulation in the instrument.
The sum to be paid may be shown only in a currency; that indication may be made in words or in figures. Where the sum has been stated both in words and in figures and there is a difference between the two indications, the amount expressed in words is taken as the basis.
The Trade Name of the Drawee
The person who is to make payment, that is, the drawee, must be shown on the instrument. By operation of the Act, only a bank may hold the capacity of drawee in cheques payable in Türkiye.
Article 782 of the Turkish Commercial Code No. 6102 regulates the consequence of that rule: an instrument drawn on a person other than a bank is, even if it carries all the other elements, henceforth of the nature of an order to pay only.
The Date of Issue
A date of issue determined as day, month and year must also appear on the instrument. For that reason, where more than one date of issue, differing from one another, appears on the instrument, the quality of a cheque cannot be acquired.
The point that gives rise to the greatest doubt and dispute in practice in connection with this element is the writing of a forward date of issue on the instrument. As a rule, the date shown on the instrument must be the date on which the instrument was genuinely issued. Nevertheless, under paragraph 5 of Provisional Article 3 of the Cheque Act No. 5941, it is possible to set a forward date of issue until 31 December 2023. The paragraph in question reads as follows:
Cheque Act No. 5941, Provisional Art. 3(5)
"Until 31/12/2023, the presentation of a cheque to the drawee bank for payment before the date of issue written on it shall be invalid."
Within the framework of this provision, until 31 December 2023 no presentation may be made to the drawee bank for the purpose of payment before the date written on the instrument; the date of issue shown on the instrument must be awaited.
For detailed information on the subject, our study entitled Time Limits in Cheques may be consulted.
The Signature of the Drawer
The presence on the instrument of a handwritten signature belonging to the drawer is among the mandatory formal conditions. The signature must have been affixed in such a way as to cover the declaration appearing on the face of the instrument.
The QR Code and the Serial Number
A cheque with a QR code is a type of instrument that allows creditors to reach information concerning the holder of the cheque account and the persons who drew the instrument. On such instruments a QR code is printed by the banks; creditors may, by scanning the QR code, access a range of data about the account holder and the drawers. The information open to access is shown in Article 780(2) of the Turkish Commercial Code No. 6102:
Turkish Commercial Code No. 6102, Art. 780(2)
"Cheque creditors may obtain access by means of the QR code to the data relating to the cheque in their hands, to the holder of the cheque account and to the persons who drew that cheque…… By means of the QR code; …..it is made available for the access of third parties without the consent of the holder of the cheque account or of the endorser being required."
The QR code practice is essentially intended to prevent the drawing of cheques without cover.
Under Provisional Article 11 of the Turkish Commercial Code No. 6102, the obligation of banks to print a QR code on instruments has been in force since 31 December 2016. Accordingly, even if no QR code appears on instruments printed before that date, that absence does not affect their validity. By contrast, instruments printed after 31 December 2016 that do not bear a QR code will not be valid.
Alternative Elements Whose Existence the Act Presumes in Certain Circumstances
Place of Issue
One of the entries that must appear on the instrument is the place of issue; where that entry is absent, however, the place shown next to the name of the drawer is accepted as the place of issue. Where no place whatever is written next to the name of the drawer either, it must be stated that the instrument is invalid.
The place of issue may be written in abbreviated form. The place meant by the abbreviation used must, however, be capable of being understood in a manner leaving no room for doubt.
Decision of the Court of Cassation on the Unification of Case Law, Case No. 1992/1, Decision No. 1992/5, dated 14 December 1992:
"It has been decided that cheques may not be regarded as invalid on the ground that the place of drawing has been written in abbreviated form, provided that it is capable of being understood without any hesitation."
Place of Payment
The place of payment must be shown on the instrument; where that entry is absent, the place of issue is deemed at the same time to be the place of payment.
Turkish Commercial Code No. 6102, Art. 781(2)
"Where there is no express statement in the cheque, the place shown next to the trade name of the drawee shall be deemed the place of payment. Where more than one place is shown next to the trade name of the drawee, the cheque shall be paid at the place shown first. Where there is no such express statement and no other entry either, the cheque shall be paid at the place where the drawee has its head office."
As is apparent from the provision, the separate determination of the place of payment on the instrument does not constitute an obligation.
Optional Entries
It is also possible to add to the instrument a number of optional entries relating to its type, to payment or to the event of non-payment.
Where, by contrast, there is an omission in the mandatory elements, the instrument cannot acquire the quality of commercial paper. The natural consequence of this is that the safeguards and conveniences afforded to commercial paper cannot be relied upon. For that reason it is of great importance, when a transaction is carried out by cheque, to verify whether the instrument carries the necessary elements.
Formal Conditions under the Cheque Act
An instrument that satisfies the formal conditions required by the Turkish Commercial Code No. 6102 is valid and holds the quality of commercial paper. The failure to satisfy the formal conditions provided for in the Cheque Act No. 5941 accordingly does not affect the validity of the instrument. It is nevertheless of benefit to be aware of the special provision in that statute.
Cheque Act No. 5941, Art. 2(7)
"On each leaf of the cheque book there shall be written:
a) the number of the cheque account,
b) the name of the bank branch at which the cheque account is held,
c) the first name and surname of the natural person holding the cheque account, or the name of the legal person,
ç) the tax identification number of the natural or legal person holding the cheque account,
d) the date on which the cheque was printed,
e) where the holder of the cheque account is a natural person, the Republic of Türkiye identity number; and in the case of legal persons, the Central Registry Record System (MERSİS) number, if any,
f) where the holder of the cheque account and the drawer are different persons, additionally the Republic of Türkiye identity number of the drawer."
Independent Legal’s Assessment
In practice, the formal conditions of a cheque most often come onto the agenda after the instrument has left the hands of the drawer and the collection stage has been reached. Yet the consequence of a missing entry cannot be remedied retrospectively: if the instrument has not acquired the quality of commercial paper, the enforcement procedure specific to commercial paper is closed off and the application of the provisions on cheques without cover also becomes debatable. For that reason a short check carried out when the instrument is taken into hand may forestall a long set of proceedings later.
At the stage of taking over or issuing the instrument, the following headings should be checked as a priority:
- That the word "cheque" appears in the text and that the order to pay has not been made subject to any condition or interest entry
- That the capacity of drawee belongs to a bank; and awareness that otherwise the document will remain of the nature of an order to pay only
- That a single, unambiguous date of issue appears as day, month and year
- Verifying, where the place of issue is not written, whether a place is shown next to the name of the drawer
- Bearing in mind that, where the amount in words differs from the amount in figures, the sum shown in words is taken as the basis
- Checking whether a QR code is present on instruments printed after 31 December 2016
Independent Legal provides advisory services in disputes arising from commercial paper, from the review of the form of the instrument to the conduct of enforcement and litigation processes.