Legal Remedies in Cases of Lack of Authorization to Represent in Insurance Policies

Entrance

A bill of exchange , a reliable and fast payment instrument in commercial life , is one of the negotiable instruments regulated in the Turkish Commercial Code (TTK). One of the most important features of a bill of exchange is its strict formal requirements. These formal requirements aim to protect the trust relationship between the parties and the negotiability of the bill of exchange.

However, one of the problems frequently encountered in practice authorization . If a person signs without authorization or exceeding their authority, the bill of exchange can be rendered invalid. In this case, the judicial and enforcement remedies available to the parties claiming rights under the bill of exchange are of great importance.

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The Concepts of Representation and Lack of Authority in Insurance Policies

The Concept of Representation

• Articles 672 et seq. of the Turkish Commercial Code regulate the elements of a bill of exchange.
• In insurance policy, representation refers to a person signing an insurance policy on behalf of another person or company.
• Especially in companies, the person issuing the policy must have the authority to represent and sign on behalf of the company

Lack of Authority to Represent

• A person who signs without authorization or exceeds their authority is considered to have no representation authority.
• This signature is not binding on the person who issued the policy.
• However, the person who signs is personally liable (Turkish Commercial Code, Article 680).

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Status of the Policy in Case of Lack of Authority to Represent

1. An unauthorized signature is invalid
   • If a policy bears the signature of someone who does not have the authority to represent the company, that signature is invalid.
2. Partial Invalidity
   • Other signatures on the policy remain valid.
   • For example, if the drawer is unauthorized but the endorsers are, the endorsers' liability continues.
3. Liability of the Unauthorized Signatory
   • According to Article 680 of the Turkish Commercial Code, a person who signs a bill of exchange without authorization personally liable .

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Ways to Seek Justice

1. Methods of Application Available to the Holder

• A lawsuit can be filed directly against the unauthorized signatory .
• Enforcement proceedings specific to negotiable instruments can be initiated (Articles 167 et seq. of the Enforcement and Bankruptcy Law).
• A compensation lawsuit can be filed.

2. The Debtor's Right to Defense

• The debtor can be relieved of liability arising from the bill of exchange by claiming an unauthorized signature.
• However, in this case, liability continues based on the other valid signatures on the policy.

3. Objection in Enforcement Proceedings

• The debtor may raise the objection of "lack of representation authority" against the enforcement proceedings.
• The court must examine the validity of the signature.

4. Criminal Liability

• Signing without authorization of forgery of an official document or forgery of a private document (Turkish Penal Code Articles 204-207).

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Lack of Authority to Represent in Light of Supreme Court Decisions

• Supreme Court 11th Civil Chamber, Case No. 2016/3241 E., Decision No. 2017/5432 K.:
  “A policy signed by a person without the authority to represent does not bind the represented party; the signatory is personally liable.”
• The 19th Civil Chamber of the Supreme Court of Turkey, Case No. 2019/4213 E., Decision No. 2020/6547 K.:
  “If the bill of exchange bears the signature of an unauthorized representative, the holder may exercise their right of recourse based on other valid signatures.”
• Supreme Court Grand Chamber, Case No. 2021/2312 E., Decision No. 2022/1432 K.:
  “An unauthorized representative's signature does not impair the negotiability of the bill of exchange; however, the unauthorized signatory assumes personal liability.”

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Problems Encountered in Practice

1. Unauthorized Signatures in Companies
   • A common problem is that individuals issuing policies on behalf of a company do not have the authority to sign.
2. Forged Signatures
   • Lack of authority to represent a party can be confused with forgery.
3. Objections in Enforcement Proceedings
   • Debtors frequently raise the objection of "lack of representation authority" in debt collection proceedings, which leads to delays in the process.
4. Problems in International Policies
   • Unauthorized signatures on behalf of foreign companies are leading to international disputes.

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Strategic Importance

From the perspective of the pregnant woman

• Lack of representation authority makes it difficult for the holder to collect the debt.
• The holder must verify that the signatures are authorised before taking possession of the policy.

From the drawer's point of view

• The drawer should avoid conducting transactions through individuals who do not have the authority to sign.

From the Perspective of the Unauthorized Signatory

• A person who signs without authorization will be held liable both legally and criminally.

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Proposed Solutions

1. Signature Authority Verification
   • Before the policy is transferred, the signatory authority must be verified with the commercial registry.
2. Electronic Signature Systems
   • Digital signature applications can reduce the problem of unauthorized signatures.
3. Stability of Judicial Precedents
   • Consistency in Supreme Court rulings should be ensured to eliminate uncertainties in practice.
4. Internal Audits
   • The authority to issue and endorse insurance policies in companies should be subject to strict control.

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Conclusion

Lack of authorization to represent is one of the issues that leads to serious disputes in commercial life. A person who signs without authorization personally liable . However, this does not invalidate other valid signatures.

Supreme Court rulings also show that, in order to protect their rights, holders must meticulously examine the existence of signing authority. Otherwise, serious losses of rights may occur in both enforcement proceedings and litigation processes.

In conclusion, in cases of lack of representation authority, legal remedies, both legal and criminal, must be carefully utilized.