WHY IS SPOUSAL CONSENT NOT REQUIRED FOR AVAL?
An Evaluation in Light of the Decision of the Supreme Court Joint Chambers (Grand General Assembly of Unification of Jurisprudence) (20.04.2018, E.2017/4, K.2018/5)
Attorney - Mediator Fatih Mehmet Tercan
info@tercanhukuk.com
1. Introduction
In Turkish law, the requirement of obtaining the written consent of the other spouse for one of the spouses to become a guarantor is guaranteed by Article 584 of the Turkish Code of Obligations (TCO) No. 6098. The purpose of this regulation is to prevent guaranty obligations entered into without the consent of the spouse as a result of familial pressure or ignorance from threatening the family economy.
However, an important question has arisen in practice: Should spousal consent also be sought in aval, which is a personal security institution specific to bills of exchange? Article 603 of the TCO regulates that the provisions regarding form, capacity, and spousal consent for guaranty shall also apply to personal security contracts concluded by real persons under other names. Should aval be evaluated within this scope?
The Supreme Court Joint Chambers (Grand General Assembly of Unification of Jurisprudence) resolved this issue, which had been controversial for a long time, by a majority vote in its decision dated 20.04.2018 and numbered E.2017/4, K.2018/5, ruling that spousal consent is not required for aval. This article discusses the legal grounds on which the said decision is based in detail.
2. In Terms of Form: Integrity of the Bill of Exchange and the Principle of Certainty
The formal requirements regarding aval are regulated by explicit and special provisions in Article 701 of the Turkish Commercial Code (TCC). Aval is established by the avalist writing "for aval" or an equivalent expression on the bill of exchange and signing it. The essence of this regulation is the principle of certainty in bills of exchange: every entry on the bill must be understandable without leaving any room for doubt.
If it is accepted that spousal consent is required in aval, serious problems arise in terms of form. First, it must be understandable from the bill itself whether the avalist is married. In order for subsequent endorsers to audit the validity of the bill, it becomes inevitable for this information to be included on the bill. Adding the identity information and marital status of the avalist to the bill or attaching official records to the bill is neither functional nor realistic in practice.
Beyond this, pursuant to Article 701/3 of the TCC, any signature written on the front face of the bill, other than the signatures of the drawee and the drawer, is deemed to be an aval endorsement. If the spousal consent is placed on the front face of the bill, the spouse themselves may fall into the position of an avalist. If it is placed on the back of the bill, there is a risk that this signature might be confused with an endorsement. Both options seriously damage the legal security of the aval and the reliability of the bill of exchange as a whole.
3. In Terms of Legal Nature: Aval is Not a Contract, But a Bills of Exchange Commitment
For Article 603 of the TCO to be applicable, there must be a "contract" concluded by real persons under another name regarding the provision of personal security. A contract is established by the mutual and compatible declaration of intent by the parties (TCO Art. 1). However, aval is realized by a unilateral declaration of intent placed on the bill of exchange by the avalist; it does not require mutual consensus.
By virtue of this legal nature, aval is not a contract, but a bills of exchange commitment. The General Assembly of Civil Chambers of the Supreme Court has also adopted this determination and emphasized that it is not correct to subject the institution of aval to the general provisions regarding guaranty (Supreme Court GACC, 24.05.2017, E.12-1135, K.1012). In the justification of Article 603 of the TCO, it is explained that the regulation in question is aimed at preventing contracts from being made under other names with the purpose of escaping the provisions protecting the guarantor. Aval cannot be evaluated within this scope, because there is no other type of commitment in bills of exchange law that is less regulated and could be resorted to as an alternative to aval.
4. In Terms of the Purpose of Protection: Guaranty Protects the Guarantor, Aval Protects the Holder
Although both guaranty and aval are personal securities, the persons they protect and the purposes pursued are different from each other. The provisions regarding guaranty aim to protect the guarantor, who may enter under heavy obligations, against the creditor. The requirement of spousal consent in Article 584 of the TCO is also a reflection of this understanding of protection: to prevent the family economy from being endangered as a result of ignorance or pressure.
The provisions regarding aval, however, serve a different purpose: to secure the holder against the principal debtor and recourse debtors. Applying the provisions regarding guaranty to aval by ignoring this functional difference of aval would not align with the purpose of normative protection. Indeed, the liability of the person giving aval is completely independent of the liability of the principal debtor; the fact that the person in whose favor the aval is given is incapacitated, that their signature is forged, or even that the person never existed does not eliminate the liability of the avalist (TCC Art. 702/2). Taking an institution with such a strong security function under the protective umbrella of guaranty provisions would contradict the essence of the institution.
5. In Terms of the Capability of Circulation and the Principle of Abstraction
The most fundamental feature that distinguishes bills of exchange from other documents is their capability of circulation. Bills can change hands rapidly; a bill may have multiple holders. The ability of each new holder to rely on the bill without being obliged to investigate previous bill relations and the personal status of the parties is one of the cornerstones of bills of exchange law.
Accepting the requirement of spousal consent in aval imposes an investigative burden on the holder that is completely foreign to bills of exchange law: they would have to examine whether the avalist is married, whether their spouse has given consent, and if they are married, whether one of the exceptions in Article 584/3 of the TCO is present. This situation is incompatible with the speed and trust required by commercial life; it practically deprives the bill of its function in circulation.
The principle of abstraction (autonomy) also supports this conclusion. The right inherent in a bill of exchange is independent of the underlying transaction; once the bill changes hands, the underlying reason that created it "freezes" and the bill acquires an existence independent of this reason. Since the rights and liabilities contained in a negotiable instrument must be understandable solely by looking at the bill, the obligation to investigate spousal consent separately outside the bill directly contradicts this principle.
6. In Terms of the Will of the Legislature
Following intense criticism that Article 584 of the TCO negatively affected business life since its entry into force on 01.07.2012, the legislature, on 28.03.2013 with Law No. 6455, added the third paragraph to Article 584 of the TCO, determining the specific situations where spousal consent would not be required. Among these exceptions, business owners registered in the trade registry, company partners and managers, tradesmen and artisans, and certain cooperative loans were listed.
What is remarkable is this: the legislature did not give a special place to aval in this regulation affecting commercial life. It is clear that this silence is not a coincidence. Considering that the TCO and the TCC entered into force on the same date (01.07.2012), the fact that the TCC, which is of a more specific and later law nature, did not separately foresee spousal consent for aval should be evaluated as a conscious choice. Any contrary interpretation would result in making some provisions of the TCO and TCC dysfunctional.
This view is also adopted in the doctrine: exceptional provisions like Article 603 of the TCO must be interpreted narrowly; expanding limitations regarding form and capacity through interpretation damages the principle of legal certainty and the principles of freedom of contract and form (Can, M.Ç.; Aksu, R.).
7. Concern for the Economic Integrity of the Family and Abuse of Right
The concern for protecting the family economy, which is the main justification for the requirement of spousal consent, cannot be ignored in terms of aval either. The concern that creditors may resort to the method of aval to avoid the formal requirements of guaranty is a justified concern on a theoretical level.
However, this concern is sufficiently resolved within the framework of the prohibition of abuse of right regulated in Article 2 of the Turkish Civil Code. It is indisputable that there are other methods besides aval in bills of exchange that can secure the claim. Therefore, instead of subjecting aval to guaranty provisions to meet the family protection concern, resorting to general principles of law in cases of possible abuse is a sufficient and proportionate solution.
8. Conclusion
The decision of the Supreme Court Joint Chambers (Grand General Assembly of Unification of Jurisprudence) dated 20.04.2018 set forth why spousal consent should not be required in aval with four main grounds:
The ground of form: Aval is subject to the special formal requirements in Article 701 of the TCC; processing spousal consent on the bill disrupts the integrity and reliability of the bill.
The ground of legal nature: Aval is not a contract, but a unilateral bills of exchange commitment; the element of "contract" envisaged by Article 603 of the TCO does not materialize.
The ground of the purpose of protection: Guaranty protects the guarantor, whereas aval protects the holder; since their normative protection purposes diverge, it is not appropriate to apply guaranty provisions to aval.
The ground of circulation and abstraction: The obligation to investigate spousal consent is incompatible with the principles of circulation and abstraction of bills of exchange law; it imposes a burden on the holder that is foreign to this law.
When these grounds are evaluated together, it is seen that the decision not to apply the requirement of spousal consent in aval is appropriate in terms of both theoretical consistency and practical necessity. The structure of bills of exchange based on speed and trust distinguishes them fundamentally from guaranty; it is inevitable that the legal consequences of this distinction are also different.
Legal Bases and Judicial Decisions
Turkish Code of Obligations No. 6098, art. 1, 135, 155, 584, 603
Turkish Commercial Code No. 6102, art. 700, 701, 702, 724, 751
Turkish Civil Code No. 4721, art. 2
Law No. 6455, art. 77 (Addition to TCO art. 584/3, 28.03.2013)
Supreme Court Joint Chambers (Grand General Assembly of Unification of Jurisprudence), E.2017/4, K.2018/5 (20.04.2018)
General Assembly of Civil Chambers of the Supreme Court, E.12-1135, K.1012 (24.05.2017)
Can, M.Ç. - Spousal Consent in Guaranty Law (Kefalet Hukukunda Eş Rızası)
Aksu, R. - The Institution of Aval (Aval Kurumu), 2015