Open Bond

What is a blank bond?

A blank promissory note is a note that has some sections left blank at the time of issuance, but is signed by the issuer and given to the creditor or another person. In practice, such notes are often also called "blank notes," "open notes," or "notes signed in blank.".

In a blank promissory note, certain fields, such as the amount, maturity date, place of payment, date of issue, or payee, may be left completely or partially blank. However, the most important condition for a note to be considered a blank promissory note is that it has been signed by the issuer and given to the counterparty to be filled in later, within the framework of a specific agreement.

The Turkish Commercial Code contains regulations regarding blank bills of exchange, and this provision also applies to promissory notes. According to Article 778 of the Turkish Commercial Code, Article 680, which concerns blank bills of exchange, also applies to promissory notes. Article 680 regulates the conditions under which a breach of contract between the parties can be asserted against the holder if the instrument, which was not fully completed when put into circulation, is filled out in a manner contrary to the agreement between the parties.

Is it legally possible to issue a blank promissory note?

Issuing a blank promissory note is generally legally permissible. Leaving certain sections blank at the time of signing does not, in itself, invalidate the note. What matters is that the note is subsequently filled in according to the agreement between the parties.

Therefore, in practice, a person may issue a blank promissory note within the scope of a specific commercial relationship, debt relationship, delivery of goods, lease relationship, vehicle sale, service contract, or guarantee relationship. The parties may also have separately agreed on the amount, maturity date, and terms under which the note will be issued.

However, there is a significant legal risk here. By leaving blank spaces on the promissory note, the person issuing it effectively allows the other party to fill them in. Therefore, later defenses such as "I did not sign for this amount" or "the maturity date was not supposed to be like this" are not always easy to prove.

Is filling in a blank promissory note later valid?

The subsequent completion of a blank promissory note is generally valid. The law does not consider negotiable instruments put into circulation without being fully completed as invalid from the outset. On the contrary, it accepts that the instrument can be completed later; however, it also evaluates whether this completion process is in accordance with the agreement between the parties.

In other words, if a blank promissory note was issued and subsequently filled in, the note does not become invalid simply because it was filled in later. If the debtor claims that the note was filled in contrary to the agreement, they must legally prove this claim.

The logic of Article 680 of the Turkish Commercial Code is also along these lines. According to the provision, if a promissory note issued in circulation without being fully completed is subsequently completed contrary to the agreement between the parties, the claim of non-compliance with this agreement cannot, as a rule, be raised against the holder; however, the situation may be evaluated differently if the holder acquired the note in bad faith or was grossly negligent during the acquisition.

Are an open promissory note and a blank note the same thing?

In practice, the terms "blank promissory note" and "open note" are often used interchangeably. However, when making a legal assessment, it is necessary to consider the content of the note, the signature, the relationship between the parties, and the purpose for which the note was issued.

Not every blank document is a promissory note. For a document to be considered a promissory note, it must contain the mandatory elements required by the Turkish Commercial Code. A blank promissory note, on the other hand, is a negotiable instrument that initially lacks some elements but is expected to be completed later according to an agreement between the parties.

Therefore, a person who says "I signed a blank promissory note" must first answer the following questions:

Is there a signature on the promissory note?
Was the note drawn up as a promissory note text?
Which fields were left blank?
Is there a written agreement on how the blank fields should be filled in?
To whom was the promissory note delivered?
Was the promissory note subsequently endorsed to third parties?
Was the promissory note subject to bill of exchange proceedings?

The answers to these questions are crucial in determining the validity of the blank promissory note and the debtor's defense options.

For what purposes are blank promissory notes issued?

Open promissory notes can be issued for various purposes. The most common situations are as follows:

Commercial goods transactions: A promissory note may be obtained before the amount of debt between the parties is finalized.

Security relationship: A blank promissory note may be issued to secure the performance of a contract.

Credit or installment sales relationship: Some fields may be left blank as the maturity date or amount of the debt will be clarified later.

Current account relationship: Since the balance of debts and receivables between the parties will be determined later, a blank promissory note can be issued.

Employment or service relationship: If the price of the work to be done will be calculated later, a blank promissory note can be accepted as collateral.

However, the purpose for which a blank promissory note was issued must be supported by written evidence. Otherwise, the amount and maturity date stated on the note could create the appearance of a strong negotiable instrument debt against the debtor.

What happens if a blank promissory note is later filled out in a manner contrary to the agreement?

A blank promissory note may have been filled out in a manner contrary to the agreement between the parties. For example, while the parties may have agreed that the note would be for 100,000 TL, it may have been filled out for 500,000 TL. Or, it may be argued that the note was given solely as collateral, but the creditor initiated enforcement proceedings for direct collection.

In this case, the debtor may claim that the promissory note was filled out contrary to the agreement. However, merely stating this claim in an abstract manner is not sufficient. The debtor must provide concrete evidence demonstrating under what agreement the note was issued, which fields were left blank, how those fields should have been filled in, and why the subsequent filling in is contrary to the agreement.

Written contracts, messages, bank statements, delivery receipts, current account records, invoice information, notices, and written agreements between the parties are particularly important at this point.

Against whom can an allegation of unauthorized filling be made?

The claim that a blank promissory note was filled out in violation of the agreement can have different consequences depending on who holds the note.

If the promissory note is still in the possession of the original holder, i.e., the person to whom it was issued, the debtor can more strongly assert a claim of breach of agreement between the parties. This is because in this case, the dispute is directly between the person who issued the note and the person who received it.

However, the situation becomes more complicated if the promissory note has been endorsed and transferred to a third party. Since the security of circulation is protected in negotiable instruments, the debtor cannot raise every personal defense against the subsequent holder. According to Article 680 of the Turkish Commercial Code, the claim of filling in contrary to the agreement cannot, as a rule, be raised against the holder; however, this defense may be considered if it is proven that the holder acted in bad faith or was grossly negligent in acquiring the instrument.

Therefore, if a blank promissory note has been transferred to a third party, it may not be sufficient for the debtor to simply say that "the note was filled out contrary to the agreement." The bad faith or gross negligence of the holder of the note should also be considered.

Who bears the burden of proof in a blank promissory note?

The person claiming that a blank promissory note was filled out contrary to the agreement is, as a rule, obliged to prove this claim. This is because the amount, maturity date, and other information written on the note constitute a strong indication under commercial law.

Therefore, the debtor cannot escape responsibility simply by saying, "I signed a blank promissory note." They must demonstrate the conditions under which the blank note was issued and the conditions under which it was filled out.

In practice, the following evidence is important in such disputes:

• The agreement drawn up between the parties,
• A document showing that the promissory note was given as collateral
• WhatsApp, email, or SMS messages,
• Bank statements,
• Invoices,
• Delivery records,
• Current account statement,
• Warning letters and responses,
• The agreements between the parties,
• Commercial records showing the amount of debt as of the date the promissory note was issued.

The availability of written evidence, in particular, significantly increases the likelihood of success in a defense based on an open promissory note.

Can an open promissory note be subject to foreign exchange enforcement proceedings?

If a blank promissory note is subsequently filled in and brought into a state that contains the essential elements of a promissory note, the creditor can initiate enforcement proceedings based on this note through the attachment method specific to negotiable instruments. The fact that the note was issued as a blank promissory note does not, in itself, prevent enforcement proceedings related to negotiable instruments.

However, the debtor may argue that the promissory note lacks the characteristics of a negotiable instrument, that it is missing essential elements, that the signature is not theirs, that the note was filled out contrary to the agreement, or that the creditor acted in bad faith. The procedure, timeframe, and evidence for raising these defenses should be evaluated separately according to the specific type of enforcement proceeding.

Because the time limits are short in bill of exchange enforcement proceedings, the debtor who receives the payment order must immediately examine the original bill of exchange, the payment order, the enforcement request, and the essential documents relating to the relationship between the parties.

What happens if a blank promissory note is given as collateral?

A significant portion of blank promissory notes are issued for security purposes. For example, blank promissory notes may be obtained to ensure the performance of a contract, secure rental debts, cover potential damages arising from the delivery of goods, or guarantee the payment of a commercial debt.

However, the fact that a promissory note is issued as collateral does not, in itself, invalidate it. What is important here is that it is clearly defined what debt the note secures, under what conditions it should be filled out, under what circumstances it can be collected, and under what circumstances it should be returned.

If a promissory note contains a phrase such as "for security purposes," the effect of this phrase on the negotiability of the note is evaluated according to the specific circumstances of the case. If the text of the note is structured in a way that eliminates an unconditional promise of payment, the negotiability of the note may become questionable. However, if the security relationship is only understood from a separate contract between the parties, this does not always automatically prevent enforcement proceedings.

Therefore, if a blank promissory note is to be issued as collateral, a separate collateral agreement must be drawn up, clearly stating the conditions under which the note can be used.

What should someone issuing a blank promissory note pay attention to?

Issuing a blank promissory note can create significant legal and financial risks. Therefore, the person issuing the blank promissory note should pay particular attention to the following points:

note should be filled in as little as possible
The amount, maturity date, payee, and date of issue must be clearly written.
A separate written agreement should state that the note is given as collateral.
How any blank spaces will be filled in should be agreed upon in writing.
A delivery receipt should be prepared when the note is delivered.
A photocopy or image of the note should be kept.
Upon payment, the return of the note must be requested, or a written document confirming its cancellation must be obtained.
Bank payments should be made with a detailed explanation.
Current account records should be kept regularly in commercial transactions.

Without these measures, an open promissory note could be filled in the future for much higher amounts, and the debtor could face a heavy burden of proof.

What should someone who buys a blank bond pay attention to?

Those who receive blank promissory notes should also exercise caution. Because an allegation that the note was filled out contrary to the agreement could lead to serious disputes in the future.

Therefore, the person receiving a blank promissory note must state in writing the reason for receiving the note, what debt it secures, and the amount and maturity date for its issuance. Especially in commercial relationships, contracts, invoices, delivery receipts, current account records, and correspondence should be kept in an organized manner.

If a blank promissory note is to be endorsed later, the circulation process of the note is also important. To avoid claims of bad faith or gross negligence, the reason for acquiring the note, the payment relationship, and the legal basis for the transfer must be clear.

Does filling in a blank promissory note afterwards constitute a crime?

Filling in a blank promissory note later does not always constitute a crime. This is because a blank promissory note may have been issued with the intention of filling in certain fields later. However, if the note is filled in in a way that clearly contradicts the agreement between the parties; for example, if the amount is unfairly increased, the maturity date is changed, the payee is written differently, or the note is used for a purpose other than its intended purpose, then a discussion of legal and criminal liability may arise depending on the specific circumstances of the case.

In such cases, the assessment should be made not only from the perspective of criminal law, but also from the perspectives of enforcement law, commercial law, and contract law. Particularly important are the date the promissory note was issued, the purpose for which it was delivered, who filled it out, the amount owed, and what written documents exist between the parties.

Is a blank promissory note invalid?

A blank promissory note is not invalid simply because it was signed blank or filled in later. Legally, the main issue is whether the note was filled out in accordance with the agreement between the parties.

If a blank promissory note is filled out in accordance with the agreement and contains its essential elements, it can be considered a valid negotiable instrument. Conversely, if the note is filled out contrary to the agreement, the debtor can invoke this discrepancy. However, if the note has passed to a third party, conditions such as the holder's bad faith or gross negligence must be considered separately before this claim can be made against the holder.

Therefore, it is not correct to give a general "valid" or "invalid" answer regarding blank promissory notes. In each case, the manner in which the note was drawn up, the agreement between the parties, who holds the note, whether it has been endorsed, and the available evidence must be examined together.

Conclusion

An open promissory note is a note signed with certain sections left blank, to be filled in later. The Turkish Commercial Code system does not consider open promissory notes invalid from the outset; on the contrary, it allows for the subsequent completion of such notes. However, the completion process must be in accordance with the agreement between the parties.

Subsequent completion of a blank promissory note is, as a rule, legally valid. However, if the note has been completed in a manner contrary to the agreement, the debtor may raise this issue. Nevertheless, the burden of proof for this claim often falls on the debtor, and if the note has been transferred to a third party, the holder's bad faith or gross negligence must be discussed separately.

Therefore, blank promissory notes should be used carefully by both the issuer and the recipient. Signing a blank note can lead to high-cost bill of exchange lawsuits, bank account liens, and significant financial liabilities in the future. If a blank promissory note is necessary, the purpose for which it is issued, the amount to be filled in, the maturity date, and the conditions under which it will be returned must be secured in writing.