What is Current Account According to Turkish Commercial Code?

05.10.2017

1- WHAT IS CURRENT ACCOUNT?
Current account agreement means that two persons may withdraw from requesting their receivables, arising from a legal cause and result, one by one or separately and may request the amount remaining after itemizing them as debts and credits. A current account agreement must be performed in writing. Otherwise, it shall not be valid.

2- WHAT ARE THE PROVISIONS OF CURRENT ACCOUNT AGREEMENT?
On condition that article 134 and clause 2 of article 143 of the Turkish Code of Obligations are reserved, these are the provisions of current account agreement.
2.1- Unless otherwise consented upon, parties do not lose their rights to sue and right of defense related to recording credit/debit in current account and agreement or transaction causing the credit/debit of parties. If agreement or transaction is terminated, items originated from them should be charged off.
2.2- If a credit originated before current account agreement is recorded in current account by the consent of parties, this credit will not be regarded as “renewed” unless otherwise consented upon.
2.3- Recording a commercial paper in current account should be done on condition that the amount is received.
2.4- Balance which is determined by the decision of the referee and identified after deduction of credit from debit at the end of every fiscal period should be entered to an account as a separate item in the new fiscal period. If the agreement is terminated or remaining amount is confiscated, it should be paid.
2.5- Interest should be accrued for the amounts written in credit column of current account after their registration in accordance with agreement or business practices.

3- USAGE OF COMMERCIAL PAPERS
Commercial paper which is written in current account but its fee is not collected should be given back to its owner and its record in current account should be deleted.

4- FEE ORIGINATED FROM COMMISSION AGREEMENT
Current account agreement between parties does not pose an obstacle to demand the fee originated from commission agreement and all kinds of expenses.

5- SHOULD CREDITS BEING OUT OF ACCOUNT BE RECORDED IN CURRENT ACCOUNT?
Uncollectible receivables and credits generated from money/goods that is given in order to spend purposefully or remain at the disposal.

6- WHAT IS BALANCE ACCORDING TO TURKISH COMMERCIAL CODE?
In accordance with agreement or commercial principles, cycle account should be closed at the end of a certain fiscal period and difference between debit items should be determined.

7- UNDER WHICH CIRCUMSTANCES IS A BALANCE REGARDED THAT IT IS ACCEPTED BY THE PARTIES?
Unless there is an agreement related to fiscal period or a commercial principle, the last day of every calendar year should be regarded as a closing date by the parties. The party who receives the detected increasing schedule will be regarded that he/she accepts the balance if he/she raises an objection via a notary, with registered letter, telegram or a writing with a secure electronic signature within one month after he/she receives it.

8- UNDER WHICH CIRCUMSTANCES SHOULD THERE BE CHARGED INTEREST TO CURRENT ACCOUNT?
There should be charged interest to the balance which is obtained by deducting debit items from each other after it is determined and registered into account. A practice causing compound interest shouldn’t be performed; agreements going against this provision cannot be accepted.

9- WHICH PROVISIONS CAN BE DETERMINED WITH COMPOUND INTEREST AND AGREEMENT?
Parties are able to decide to add the interest to the capital whenever they demand (on condition that it shouldn’t be less than 3 months). Furthermore, they are also able to determine the amounts of fiscal periods, interests and commissions.

10- WHAT IS INTEGRITY PRINCIPLE?
Credits and debits recorded in current account are an inseparable whole. None of parties will be regarded as a creditor or a debtor before current account is balanced. Legal status of parties will be determined with balanced current account at the end of the agreement.

11- UNDER WHICH CIRCUMSTANCES SHOULD CURRENT ACCOUNT AGREEMENT BE TERMINATED?
Current account agreement should be terminated under these circumstances;
11.1- Expiry date of assigned time
11.2- Termination notice of one of parties (in the event that they haven’t agreed on a certain time)
11.3- Bankruptcy of one of parties

12- WHAT SHOULD BE DONE IN CASE OF THE DEATH OF ONE OF PARTIES?
If the agreement is periodical and one of parties dies or restricted within that period, parties with their successors and their legal representatives have a right to terminate current account agreement on condition that they declare it 10 days in advance. However, payment of remaining amount can be made at the closing date according to article 94.

13- UNDER WHICH CIRCUMSTANCES CAN CURRENT ACCOUNT BALANCE BE SEQUESTRATED?
13.1- Remaining amount should be calculated by closing the account when creditor of one of parties sequestrates his/her remaining balance.
13.2- In this case, if the party given a notification about sequestration because of debits does not release sequestration within 15 days, the other party may terminate the agreement. If not, situation of the person who proceeds the sequestration cannot be made heavier by recording new items in current account.
13.3- Creditor who proceeds the sequestration may demand to collect the amount corresponding to his/her credit from credit balance and also can collect it according to article 94 at the same time.

14- WHEN DO CURRENT ACCOUNTS LAPSE AND WHAT ARE THE CONDITIONS FOR IT?
Cases related to interest claims or remaining amounts accepted or determined with court decision, calculation errors, items which should be kept out of current account or recorded unrightly in current account, repetitive accounts can lapse 5 years after the termination of current account agreement.

Source: Turkish Commercial Code