WHAT IS THE PARTICIPATION TO AN OBLIGATION UNDER TURKISH CODE OF OBLIGATIONS? 2 June 2020

Participation to an obligation contract is a legal institution accepted with Article 201 of the Turkish Code of Obligations numbered 6098. As per this article, participation to an obligation is defined as a contract concluded between the participant and creditor as a result of which the participant becomes jointly responsible for the obligations along with the principal debtor. The participant and the debtor shall be jointly and severally liable to the creditor through the execution of the participation to an obligation contract. Participation to an obligation means that the principal debtor remains as debtor while the participant becomes jointly liable for the performance of the same obligation that the principal debtor is subjected to.

Participation to an obligation contract shall be concluded by and between the participant and the creditor. In accordance with the legal regulation, the participation to an obligation contract is not, as a rule, bound by a special form requirement. However, there are opinions in the doctrine that in participation to an obligation which pursues the purpose of guarantee as the legal characteristic, the written form requirement of warranty contracts should be applied to the extent possible.

Participation to an obligation is a legal institution which is mainly applied as a guarantee. However, aside from providing a guarantee, it can be made for the debt assumption in internal relation between the participant and the debtor. The debt of the participant arising from the participation to an obligation contract is an accessory consideration at formation of the debt stage but becomes independent from the principal debtor’s debt after the execution of the contract.

In other words, the main condition of participation to an obligation is the existence of a legally valid debt at the moment participation to an obligation occurs. In cases where the debt does not exist or is invalid, participation in debt becomes invalid and there shall not arise any debt for the participator.

It should be pointed out that the debt arising from the participation to an obligation represents a new debt for the participant. In this respect, it is possible to say that participation to an obligation doesn’t cause a change of contract. In the internal relationship, participant and the principal debtor share the liability and each are liable from the debt with the amount that falls into their share. The debtor, who pays to the creditor more than their share, may revoke the amount above their share to the other.

The legislator accepts an exception to the “the fulfilment of the debt arising from the contract can be requested only from the debtor” consequence of the relativity principle, by regulating that the participant shall be jointly and severally liable with the debtor to the creditor in the participation in debt. In principle, the extent and content of participant’s debt should be determined according to the extent and content of the debt at the participation moment. However; it should be remarked that it is also possible for the parties to include contrary arrangements to the participation to an obligation contract.

Consequently, participation to an obligation which is regulated in the Turkish Law with Article 201 of the Turkish Code of Obligations appears as an institution that ensures that the debtor is jointly liable together with the principal debtor. However, in the light of the above explanations, the conditions for the establishment of the participation to an obligation contract should be carefully determined. Otherwise, contrary to the purpose of the parties, the arrangements that may result under institutions regulated under the Turkish Code of Obligations such as debt assumption or participation to an agreement.