Statute Of Limitations In Commercial Papers

A. COMMERCIAL PAPERS

Commercial papers are negotiable instruments that include a promise to pay a certain amount under specific terms and conditions. According to the Turkish Commercial Code, commercial papers comprise promissory notes, bills of exchange, and checks. Each type of commercial paper is subject to specific conditions for issuance. For detailed information about commercial papers, you can review our article.

B. STATUTE OF LIMITATIONS

In Turkish law, the exercise of a receivable right is generally limited to a specific period. The statute of limitations allows the debtor to avoid payment if the receivable is not claimed within the prescribed period.

The statute of limitations does not terminate the receivable right but renders it an “incomplete debt.” If a claim is made after the statute of limitations expires, the debtor can raise the defense of limitation to avoid payment. When the principal debt becomes time-barred, associated claims such as interest also become unenforceable.

If the debtor fails to invoke the statute of limitations and pays the debt, the payment remains valid. In such cases, the debtor cannot claim reimbursement by asserting ignorance of the limitation.

C. STATUTE OF LIMITATIONS IN COMMERCIAL PAPERS AND ITS CONSEQUENCES

The exercise of rights in commercial papers is also limited to a specific period. If the claim is not made within this period, the instrument does not lose its negotiable nature. Therefore, the creditor can still initiate enforcement proceedings or file a claim based on the commercial paper. However, if the debtor invokes the statute of limitations, the paper loses its status as a negotiable instrument.

When a commercial paper loses its negotiable status, the creditor forfeits rights under commercial law. A time-barred commercial paper does not transform into a simple document. Nevertheless, such an instrument can serve as written evidence for the underlying legal relationship.

1. Statute Of Limitations In Promissory Notes

The statute of limitations for promissory notes varies depending on the claimant’s position and the party against whom the claim is made:

• Claims against the principal debtor must be made within three years from the due date.
• Claims by the holder against endorsers must be made within one year from the due date.
• Claims by one endorser against another must be made within six months from the date the note is paid or enforced against the endorser.

2. Statute Of Limitations In Bilss Of Exchange 

The statute of limitations for bills of exchange also varies based on the claimant’s position and the party against whom the claim is made:

• Claims against the principal debtor must be made within three years from the due date.
• Claims by the holder against endorsers must be made within one year from the date of protest or the due date.
• Claims by one endorser against another must be made within six months from the date the bill is paid or enforced against the endorser.

3. Statute Of Limitations In Checks 

The holder’s rights to pursue endorsers, the drawer, and other liable parties become time-barred after three years. The limitation period begins on the check’s presentation date.

Due to its function as a payment instrument, checks are subject to shorter presentation periods:

• If the check is payable at the place of issuance, it must be presented to the drawee bank within ten days from the issuance date.
• If the check is payable elsewhere, it must be presented within one month from the issuance date.
• For checks drawn in a different continent, the presentation period is one month if the drawer and payment locations are on the same continent, and three months if on different continents.

These periods begin from the date specified as the issue date on the check. If the check is not presented within these periods, it loses its negotiable status.

A debtor’s rights against another debtor regarding a check become time-barred three years after the date of payment or the enforcement date.

D. INTERRUPTION OF THE STATUTE OF LIMITATIONS

If specific events occur, the running of the limitation period is interrupted, and a new period begins. The limitation period for commercial papers is interrupted by:

• Filing a lawsuit based on the commercial paper;
• Initiating enforcement proceedings;
• Notifying the claim in a lawsuit;
• Registering the receivable in the bankruptcy estate.

If there are multiple debtors, the interruption for one does not affect the others.