What are Negotiable Instruments? What are the Elements and Characteristics of Negotiable Instruments?

Negotiable instruments are one of the most important institutions of commercial law, special documents that represent a right with economic value, and this right cannot be asserted separately from the instrument . According to Article 645 of the Turkish Commercial Code: "Negotiable instruments are those in which the right contained cannot be asserted separately from the instrument, nor can it be transferred to others ." As this definition shows , there is a much stronger link between the instrument and the right in negotiable instruments than in ordinary documents. The instrument is not only a means of proving a right, but also the necessary instrument for the exercise and transfer of that right. The fundamental function of negotiable instruments in commercial life is to provide trust, speed, and ease in economic relations. The circulation of receivables, partnership rights, or certain rights over property has become possible through instruments subject to a specific form. Thus, individuals can conduct transactions relying on the instrument without directly investigating the underlying contract . TYPES OF NEGOTIABLE INSTRUMENTS REGULATED IN THE TURKISH COMMERCIAL CODE I. Joint Stock Company Shares, Provisional Certificates, Coupons and Talons (Turkish Commercial Code Articles 484, 486, 661 et seq.) • Shares: These are negotiable instruments representing a share in the capital of a joint stock company. Through these certificates, the shareholder exercises the rights to receive dividends, vote, receive liquidation shares, pre-emptive rights (to acquire new shares), and receive information . They can be registered or bearer. • Provisional Certificates: These are negotiable instruments issued temporarily before the share certificates are printed and which replace the share certificate. • Coupons: These are documents that provide the shareholder with dividends, interest during the preparation period, and pre-emptive rights. • Talons : These are negotiable instruments that give the holder the right to acquire new coupon sheets. II. Usufruct Certificates (Turkish Commercial Code Articles 502 et seq.) These do not grant the holder the status of shareholder (partner); However, it provides property rights such as sharing in net profit, participating in the liquidation balance, or benefiting from newly issued shares . III. Debt Instruments and Securities Granting the Right to Purchase and Exchange (Turkish Commercial Code, Article 504 et seq.) Bonds, Financing Notes, Discounted Debt Instruments, Asset-Backed Securities, and Convertible Bonds issued by companies for financing purposes are included in this scope. IV. Negotiable Instruments (Turkish Commercial Code, Article 670 et seq.) There are three types representing monetary claims, subject to strict formal requirements: Bills of Exchange, Promissory Notes, and Checks. V. Commodity Instruments: Receipt Notes and Warrants (Turkish Commercial Code, Article 832 et seq.) • Receipt Note: Represents the right of ownership over goods left in a general warehouse. • Warrant: Represents the right of pledge over the same goods. Goods can be sold or used as collateral for credit without being removed from the warehouse. VI. Other Promissory Notes (Turkish Commercial Code, Articles 824 et seq.): For example, a bill of exchange payable to order is a promissory note that, although it does not contain the word "bill of exchange" in its text, contains the other elements of a bill of exchange and is explicitly issued payable to order. "This system speeds up commercial life."

Elements and Characteristics of Negotiable Instruments:

1. The Element of a Document and its Material Existence: The most fundamental element of a negotiable instrument is that a right is embodied in the form of a "document." In legal terms, a document is any object representing information or a declaration of intent; in practice, this object is usually paper. For a document to be valid, a handwritten signature is generally required. Except for exceptions accepted by custom (such as securities), negotiable instruments cannot be issued using mechanical means or secure electronic signatures . The document serves as the necessary physical medium for both proving and transferring the right . 2. The Element of a Right Measurable in Monetary Terms and Transferable: Not every right can be the subject of a negotiable instrument. For a document to qualify as a negotiable instrument, the right it contains must be "transferable" and "measurable in monetary terms" (having financial value). Rights strictly personal to an individual (e.g., the right to marry) cannot be represented on a document. The right in a negotiable instrument;a receivable It can be in the form of (money), a partnership (share), or a real right (property). 3. Organic Link (Embodiment) Between Right and Instrument: The most characteristic feature of negotiable instruments is the close link between the right and the instrument. This link has three fundamental consequences: Presentation of the instrument to the debtor is a prerequisite for claiming the right; the right can only be transferred to another person through the assignment of the instrument; and the right cannot be asserted separately from the instrument unless the instrument is cancelled. This organic link is defined as the "dissolution" or "embodiment" of the right within the instrument. 4. Strict Adherence to Formal Requirements: One of the characteristics of negotiable instruments, especially bills of exchange, is "strict adherence to form." The absence of any of the minimum elements stipulated by the law (Turkish Commercial Code) (type of instrument, amount, signature, etc.) causes the instrument to lose its status as a negotiable instrument of that type. This characteristic ensures the security of circulation and allows third parties examining the instrument to understand its nature and the scope of the debt at a glance. 5. Abstraction (Abstractness) Characteristic: One of the most important characteristics of negotiable instruments, especially bills of exchange, is their abstraction from the underlying legal relationship. The instrument has a legal life independent of the original debt relationship that gave rise to it . Defects or terminations in the underlying relationship generally do not affect the validity of the instrument. This characteristic increases the reliability and speed of the instrument's exchange in the market. 6. Public Trust (Protection of Good Faith): Negotiable instruments circulate based on the trust that society places in them. The legal consequence of this trust is the characteristic of "enjoying public trust ." The trust that a person acting in good faith who acquires the instrument has in its outward appearance (text) is protected.defenses (objections) that are not clear from the text of the instrument or that are personal The debtor cannot raise against a holder acting in good faith. This characteristic is a reflection of the "speed and reliability" principles of commercial law. 7. Principle of Independence of Signatures: When a negotiable instrument bears the signatures of more than one person, each signature retains its own legal validity. The forgery of a signature or the incapacity of a signatory does not affect the validity of the other signatures. Each signatory remains bound by their own declaration. This characteristic ensures that each link in the chain of transmission of the instrument creates independent liability from the others. One of the strongest arguments of negotiable instruments is that everyone whose signature is on the instrument is jointly and severally liable to the holder. The holder can demand the entire debt from any or all of the signatories . According to the principle of "independence of signatures," the forgery of a signature or the incapacity of a person does not relieve the owners of the other valid signatures from the debt. This structure maximizes the collectibility of the promissory note, offering the creditor a very broad range of security.

Helin SAN