We see that the Lenders are more and more interested in the use of the Promissory Notes, so called Senets under the Turkish practice. A senet is a two party instrument written dated and signed, containing an unconditional promise by the issuer to pay a definite sum of money to a payer on demand or at a specified time.

The aim of obtaining the Promissory Notes from the Borrowers, Corporate guarantors and the Personal guarantors shall be for many reasons such as;

1.     to secure the repayment of an installment ( principal & interest

2.   to secure the asset loan ratio loss of a debt.

3.       to secure the further, payment obligations of a borrower party under a restructuring scheme.

Promissory Notes are dealt in the same system in Turkey as it is in the continental Law Systems.They are documents of title and are negotiable instruments.They are unconditional and bear the promise of an abstract declaration of debt. They shall be obtained to cover each /an installment or any other payment that will be effected by the Borrower at a certain future date. It is a written promise to pay money that is often used as a means to borrow funds .   We use the Promissory Notes to cover an each installment or any other payment that would be realised by the Borrower at a certain date. They can be enforced quickly and efficiently under Turkish legal practice giving rise to the arrest of any assets, monies, funds belonging to the Borrower

Promissory Note is a negotiable instrument. It contains an unconditional promise to pay a certain sum to the order of a specifically named person or to bearer, that is to any individual presenting the note. A Promissory Note can be either payable on demand or at a specific time. The reason that they become convenient for use is the more quick and efficient procedure for enforcement under Turkish legal practice.compared to the enforcement of the mortgages or other security documents ,

The enforcement procedure, gives rise to the arrest of any property, monies, funds belonging to the Debtor of the P/N by obtaining a precautionary verdict from the competent Turkish Court.They can be replaced / used as a re placement security in the place of a corporate or a personal guarantee or borrowers debt restructuring because Promissory Notes are definite , absolute instruments.There are different time bar periods, applied to the enforcement of the Promissory Notes, depending on the endorsement conditions.In general the time bar is 3 years commencing from the date of issue .

If the Promissory note is enforced at a later date (within 10 years ,the limit ) then ,it loses the character of being a document of title. We recommend that the beneficiary (the Lender Bank in the financing transactions) commences legal action latest in 3 years time.

Certain types of Promissory Notes such as corporate bonds or retail installment loans can be sold at a discount an amount below their face value.( kýrdýrma) The notes can be subsequently redeemed on the date of maturity for the entire face amount or prior to the due date for an amount less than the face value. The purchaser of a discounted Promissory Note often receives interest in addition to the appreciated difference in the price when the note is held by maturity obligor ( maker ) payer.The promissory notes shall be enforced by commencing legal proceedings in front of the Turkish Courts Bailiff’’s offices. The legal proceedings shall be made in accordance with the legal procedure that is applied for the Kambiyo Senets ,documents of title, where the Bailiff’s officer sends a payment order to the Debtors and asks them to lodge the value of the senet with 10 days or/ to start legal proceedings if he/she has any oppositions within 5 days at the competent execution court obtaining , a contrary decision obstructing the enforcement.

HOW Do We DRAFT A TURKISH PROMÝSSORY NOTE

There are usually printed SENETS ( Promissory Notes ) commonly used in the Turkish merchant practice, you shall prepare these documents by filling in the blank spaces. .A Turkish Promissory Note shall be drafted in other languages , mainly in English. You will find that the essential items that must be written on this document are as follows; 1) The word Promissory Note to the order of the …2. The unconditional will to make a certain payment 3. The maturity 4. The place of payment 5. The person that the payment will be paid 6. The date and place of issue7. The signature of the MAKER ( the debtor )If the maturity date is not shown, then the Promissory Notes reflects that it will be paid upon presentation.If there is no information about the place of payment then, the place of issue, is considered the place of payment, it is also accepted as the residence of the MAKER. If the Promissory Note, is drafted in the form that it will be paid after a certain period upon presentation. Then, these Promissory Notes must be presented within one year after the date of issue. It shall be conditioned over the leaf of the P/N that if one of the promissory notes is not paid on the due date ,all the other notes shall become due and payable . The Bank shall give notice to the debtors which it is not obligatory . The Bank shall commence legal action at the Courts to enforce the P/N ‘s and to collect the monies through judicial ways .The protest Letter to the Borrowers should be served via the notary public. This does not have any relevance with the enforcement of the promissory notes. Any letter , reminder,waiver or notice of default must be served upon the corporate Borrowers , guarantors and the personal guarantors through the notaries upon an evidence of receipt of the delivery . Sema Yerlikaya LL.M 

Attorney at Law

Founder member of Turkish Maritime Association