Forbiddance of Endorsement of the Bill of Exchange by Drawer

The legal outcome of the no endorsement clause in which the endorser writes his endorsement on a bill of exchange is regulated in the second paragraph of the Turkish Commercial Code No: 6102 article 685 and in the second paragraph of the (former) Turkish Commercial Code No: 6762 article 597. These provisions relate to the endorsement of bill of exchange. However, they are also applied to promissory notes and cheques. Both of these provisions regulate that the endorser may forbid further endorsement of the bill of exchange and in this case, he is not liable to those persons to whom the bill of exchange is further endorsed. As for the legal outcome of providing a «no endorsement» or «endorsement forbidden» clause by the drawer on a bill of exchange, there is no provision in either Turkish Commercial Code No: 6102 or (former) Turkish Commercial Code No: 6762. However, today quite a large part of the Turkish doctrine is of the opinion that a «no endorsement» or «endorsement forbidden» clause which is written on a bill of exchange by the drawer is a recta clause (not to order clause). According to this opinion, a bill of exchange which is provided by the drawer with a «no endorsement» or «endorsement forbidden» clause shall be a registered security. Consistent ruling of the Court of Cassation is in the same direction as this approach. However, our personal opinion on the subject is different. This article is written with the purpose of explaining our personal opinion about the legal outcome of the «no endorsement» or «endorsement forbidden» clause which is written on a bill of exchange by the drawer. First of all, the opinions that are expressed in the doctrine are featured in the article. Then the Court of Cassation rulings concerning the problem are addressed. Finally, our personal opinion is expressed.