A. Meaning of Transfer of Receivables and Definition According to TCO
The Turkish Code of Obligations (“TCO”) no. 6098 regulates the transfer of receivables on Article No: 183 ff. TCO regulates transfer of the receivables in the related articles under three main titles as voluntary, legal and judicial transfer, and in practice, the most common transfer is observed as the voluntary transfer of receivables.
The code with the transfer of receivable provisions, gives the creditor of a debt the right to transfer the right of receivable to another person, if the law, contract or nature of business permits the transaction. Therefore; with transfer of receivable a different third person is included in the relationship between debtor and creditor and takes over the title of creditor. In this context, Article 183 of TCO explicitly rules with the provision “Unless the law, contract or the nature of the business is hampered, the creditor may transfer his/her debt to a third party without seeking the consent of the debtor” that the consent of the debtor is not necessary for the validity of the transaction. Therefore, in order for the transfer of the receivable to be possible, it must be an existing receivable. Accordingly, if the debt has not been born at all or the debt has been paid, discharged, cleared or deducted, etc., the receivable cannot be subject to a transfer of receivable transaction.
B. Conditions of Transfer of Receivable
In accordance with Article 183 of the TCO; it is stated that if there is an obstacle originating from the law, or in the contract made by the parties or due to the nature of the business, the receivable is not available to be transferred.
Non-transferable receivables are generally the rights strictly connected to the individuals, such as the right to demand proxy duty from the representative of the client, the right arising from the prohibition of competition, rights arising from membership to the association, alimony receivables, pre-emption, purchase and repurchase rights. Receivables that are not transferable by law are regulated in different codes.
Apart from this, pursuant to Article 184 of the TCO; the validity of the transfer of the receivable is dependent on the contract to be made in writing. Therefore, the assignment of receivable through a verbal agreement can only be accepted as a commitment and the written form requirement must be complied in order for the assignment process to have legal consequences.
Finally, pursuant to Article 190; “the transferee is obliged to deliver the necessary information to the new creditor in order for them to receive the receivable and other documents related to the proof of debt and the deed showing the debt.” Therefore; with the assignment of the receivable, the transferor incurs the debt to deliver the deed and documents related to the receivable and forwarding the necessary information. As can be clearly understood from the letter of the law; since this debt is a transaction related to the assignment of the receivable, it has no secondary qualifications and is regulated as an element of the original debt.
C. Warranty Obligation of the Transferor
In accordance with Article 191 of the TCO; in the event that the receivable is transferred in exchange for an act, the obligation arises for the transferor to guarantee the existence of the debt and the transferor’s ability to pay in the moment of the transfer of receivable transaction. The scope of this responsibility is regulated within the framework of Article 193 of the TBK which regulates;
“The creditor may make the following claims before the transferor liable with the warranty:
- The return of the counter-performance it performs with its interest.
- Expenses caused by the transfer.
- Expenses incurred by the ineffective initiatives to obtain the credit it has taken over against the original debtor.
- Other losses incurred unless the transferor proves its good faith.
D. Provisions of the Transfer of the Receivable for the Debtor
It is not necessary to obtain permission from the debtor for the transfer of the receivable to produce results. However, some provisions are regulated by the TCO in order to protect the debtor, whose approval is not received and whom that is not even required to be informed in order for the transfer of the receivable to be valid. In this regard, the first issue regarding the condition of the debtor is that the debtor is accepted to be discharged from debt as a result of performance in good faith. Therefore, “if the debtor is not notified by the transferor or the transferee that the receivable is transferred, then they would be able to be discharged from their debt by performing in good faith to the previous creditor.”
Article 187 of the TCO regulates the provisions for avoidance of performance and deposit of debt. In accordance with this article, the debtor of a contested debt, has the right to avoid performance and be discharged of debt by depositing the amount of the debt to the place determined by the judge. However, in this context, if it is known to the debtor that the receivable in accordance with 187/2 is controversial, the debtor will be responsible for the consequences of performance.
In addition, pursuant to Article 188 of the TCO, the debtor may claim their defenses against the transferor that they possess in the moment of the transfer of receivable to the transferee. In this context, pleas such as lapse of time can also be claimed against the new creditor who took over the debt. Likewise, the debtor can swap his non-due receivables as soon as he / she learns the transfer, on condition that it is due before or at the same time as the transferred receivable. Therefore, in case of another and reverse bilateral debt relationship between the new creditor and the debtor; these debts can be exchanged for each other.
Transfer of the receivable within the scope of TCO is the addition of a third person who takes over the debt in the debt-receivable relationship, which is normally bilateral. Although the debtor’s consent is not a legal requirement for the transfer of the receivable; in practice, it is common to notify the debtor of this transfer in order to prevent the debtor from getting rid of his debt with performance in good faith. As a matter of fact, within this framework, it is frequently requested in practice to legalize this notification for the creditor by requesting a board decision to be taken by the board of directors especially for legal persons therefore ensuring the removal of a possible good faith defense in the future.