The Implications of the Difference Between Blank Sales and Full Sales in Practice

Entrance

Bills of exchange and promissory notes , among the most commonly used negotiable instruments in commercial life , provide security and speed in economic life thanks to their negotiability. This negotiability is ensured through endorsement . Endorsement is the most important institution that allows the transfer of rights arising from the instrument.

In the Turkish Commercial Code (TTK), endorsements can be made in different ways. The most common types in practice are full endorsement and blank endorsement. The difference between these two types of endorsement is critically important in terms of protecting the rights of the holder, the defenses of the debtor, and the security of the instrument's circulation.

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The Concept of Turnover and its Legal Basis

What is turnover?

• Turkish Commercial Code Articles 681 et seq. regulate endorsements.
• Endorsement is a written statement that transfers the rights arising from a bill of exchange or promissory note.
• The endorsement is written on the back or an addendum of the promissory note and includes the endorser's signature.

Types of Sales Revenue

1. Full Endorsement: The new holder's name is clearly written.
2. Blank Endorsement: Only a signature is affixed without writing the new holder's name.
3. Collection Endorsement: An endorsement made for the purpose of collecting a receivable.
4. Endorsement as Collateral: An endorsement made to secure a debt.

This article focuses on the difference between blank turnover and full turnover.

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Endorsement in full

Definition

• In a full endorsement, the name of the new holder is written along with the endorser's signature.
• The document clearly states who the rightful owner is.

Features

• The rights holder is a specific person.
• A separate delivery is required for the transfer of endorsement.
• It has a high level of security in circulation.

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White Turnover

Definition

• In a blank endorsement, the endorser only signs; the name of the new holder is not written.
• Anyone holding the document appears as the holder.

Features

• The person holding the promissory note is considered the rightful owner.
• For the transfer to be completed, simply handing over the property is sufficient.
• It is easy to circulate, but the risk of counterfeiting and unauthorized possession is high.

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Differences Between Blank Sales and Full Sales

Feature	Endorsement in full	White Turnover
Rights Holder	Specific person	The person holding the promissory note
The era	Delivery + Revenue	Delivery only
Security	Higher	Lower
Circulation	Slower	Faster
Evidential Value	Stronger	Weaker
Implementation Risk	Low	High (fraud/objection)

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Results in Practice

1. From the Perspective of the Bearer

• Full Revenue: It's easier to prove ownership.
• Blank Endorsement: Since the person holding the promissory note is considered the rightful owner, the burden of proof becomes debatable.

2. From the Debtor's Perspective

• Full End of Payment: The debtor knows who to pay.
• Blank Endorsement: The debtor risks making a payment to the wrong person.

3. Negotiability

• Full Turnover: Safer, but slows down circulation.
• Blank Turnover: Provides fast circulation but increases the risk of counterfeiting.

4. Differences in Enforcement Proceedings

• In enforcement proceedings involving blank endorsements, the debtor more frequently resorts to the defense of lack of signature or authorization.
• With full endorsement, the holder's ownership rights are clearer, making the tracking process more reliable.

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Blank Endorsement and Full Endorsement in Light of Supreme Court Decisions

• Supreme Court 11th Civil Chamber, Case No. 2016/3241, Decision No. 2017/5432:
  “A person holding a promissory note transferred with a blank endorsement may exercise the rights arising from the note.”
• Supreme Court 19th Civil Chamber, Case No. 2018/4321, Decision No. 2019/5432:
  “A full endorsement makes it easier to prove ownership in enforcement proceedings because it identifies the holder.”
• Supreme Court Grand Chamber, Case No. 2021/2312 E., Decision No. 2022/1432 K.:
  “While a blank endorsement facilitates the circulation of the instrument, it may create problems in proving the rights of the holder.”

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Problems Encountered in Practice

1. Forged Signatures: Blank endorsements are more susceptible to abuse through forged signatures.
2. Unauthorized Transfers: Unauthorized transfers increase because in blank endorsements, anyone holding the promissory note appears as the holder.
3. Objections in Enforcement Proceedings: Debtors frequently raise objections of lack of jurisdiction in enforcement proceedings based on blank endorsements.
4. Problems in International Trade: Blank endorsements may not always be accepted in foreign courts.

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Strategic Importance

From the perspective of the pregnant woman

• While it's easy to acquire a promissory note with a blank endorsement, claiming rights to it can become more difficult.
• For large-value transactions, full turnover should be preferred.

From the Debtor's Perspective

• A blank endorsement increases the risk of the debtor making a payment to the wrong person.
• The debtor is required to document to whom the payment was made.

From the Cirantas' Perspective

• Blank endorsements can obscure the liability of endorsers.
• Full turnover strengthens the chain of responsibility.

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Proposed Solutions

1. Full Turnover Preference for Large Amounts
   • Full endorsement should be used for high-value insurance and bond transactions as it is safer.
2. Electronic Turnover Systems
   • Endorsements made with digital signatures can reduce the risk of fraud.
3. Stability in Judicial Precedents
   • The Supreme Court's decisions need to be more predictable.
4. Attention of the Pregnant Woman
   • The person receiving the promissory note must carefully check the chain of endorsements.

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Conclusion

Endorsement is the most important mechanism ensuring the negotiability of bills of exchange and promissory notes. The difference between blank endorsement and full endorsement has serious consequences in practice.

Full endorsement increases security but slows down the circulation rate; blank endorsement, on the other hand, increases speed but reduces security. Supreme Court rulings also show that choosing the correct type of endorsement is critical to safeguarding the holder's rights.

In conclusion, for the sake of commercial security, parties should act with an awareness of the consequences of the type of turnover.

Gozdenur Turna