Essential Elements Of Promissory Notes 

Negotiable Instruments and Commercial Papers

In commercial law, negotiable instruments are documents that embody rights inseparable from the document itself.

Commercial papers are a subtype of negotiable instruments, constituting documents that create specific rights.

Types of Commercial Papers

Commercial papers are documents promising payment of a specified amount under defined terms and conditions.

These papers are subject to strict formal requirements and create rights upon issuance.

According to the Turkish Commercial Code, commercial papers include bills of exchange, promissory notes, and checks.

Check

A check is an order directing a bank to pay a specified amount to a designated person.

For a document to qualify as a check, the following conditions must be met:

• The term “check” must appear on the document.
• It must contain an unconditional promise to pay a specified amount.
• The payor (drawee) must be specified, and only banks can be drawees under Turkish law.
• The issuance date must include the day, month, and year.
• The place of issuance must be explicitly mentioned. If omitted, the issuer’s address is assumed.
• The issuer’s signature must appear on the check.

A document failing these requirements cannot be considered a check. However, a blank check may be delivered to the beneficiary for later completion under mutual agreement.

Promissory Note

A promissory note is a negotiable instrument containing a promise to pay a specific amount. In commercial practice, promissory notes are commonly referred to as “notes.”

For a promissory note to be valid, the following requirements must be fulfilled:

• The term “promissory note” must appear on the document.
• It must include an unconditional promise to pay a specific amount.
• The beneficiary’s full name or trade name must be stated.
• The issuance date must include the day, month, and year.
• The place of issuance must be clearly stated. If omitted, the issuer’s address is assumed.
• The payment location must be specified. If omitted, the place of issuance is considered the payment location.
• The issuer’s signature must be included.
• The due date must be indicated. If omitted, the note is considered payable on demand.

A document lacking these elements cannot be considered a promissory note. A blank promissory note may be delivered to the beneficiary for later completion by agreement.

Bill of Exchange

A bill of exchange orders a specific individual to pay a designated person a stated amount. The drawer instructs a third party to pay the specified amount under the terms in the document.

For a document to qualify as a bill of exchange, it must meet these requirements:

• The term “bill of exchange” must appear on the document.
• It must include an unconditional order to pay a specified amount.
• The payee’s full name or trade name must be included.
• The payer’s (drawee’s) full name or trade name must be specified.
• The issuance date must include the day, month, and year.
• The place of issuance must be clearly indicated. If omitted, the drawer’s address is assumed.
• The payment location must be specified. If omitted, the place of issuance is considered the payment location.
• The drawer’s signature must be included.
• The due date must be specified. If omitted, the bill is payable on demand.

A document missing these elements cannot qualify as a bill of exchange. A blank bill may be delivered to the payee for later completion by agreement.

Commercial papers are subject to strict formal requirements. Legal assistance is crucial to avoid any rights loss.