Learn how assumption of debt works under Turkish law, including internal assumption, external assumption, creditor consent, defenses, collateral, nullity, business transfers, and the distinction between debt assumption and contract assignment.
Introduction
Assumption of debt under Turkish law is mainly regulated in the Turkish Code of Obligations No. 6098. It is one of the core mechanisms by which the debtor side of an obligation can change. Turkish law, however, does not treat every transfer involving a contractual relationship in the same way. It distinguishes between the assignment of receivables, the assumption of debt, participation in debt, and assignment of contract. This distinction is fundamental. An assignment of receivables transfers the creditor’s claim. Assumption of debt changes the debtor. Contract assignment goes further and transfers the whole contractual position, including both rights and obligations.
In commercial practice, debt assumption is highly relevant in restructurings, intra-group reorganizations, asset and business transfers, financing refinancings, settlements, succession planning, and post-closing reorganizations. But Turkish law does not allow the debtor side to be changed as freely as the creditor side. While a receivable can generally be assigned without the debtor’s consent, a debtor cannot ordinarily be replaced without the creditor’s consent. This is because the creditor has a legitimate interest in who stands on the debt side of the legal relationship.
For that reason, anyone dealing with assumption of debt under Turkish law should start with a classification question: Is this an internal arrangement between the old debtor and the new undertaking party, an outward substitution requiring creditor consent, a business transfer carrying debts by operation of law, or actually a broader contract assignment? The legal consequences change depending on that answer.
This guide explains assumption of debt in Turkey in practical English. It covers internal assumption, external assumption, creditor consent, the legal effect of changing the debtor, the treatment of collateral and guarantees, debtor defenses, nullity, participation in debt, acquisition of assets or business, mergers, and the difference between debt assumption and contract assignment.
The Legal Framework in the Turkish Code of Obligations
The Turkish Code of Obligations regulates this subject under the heading “Changes of Parties in Debt Relationships.” After dealing with receivable assignment, the Code turns to assumption of debt in Articles 195 to 204. Then, in the following part, it separately regulates contract assignment and contract participation in Articles 205 and 206. This structure is important because it confirms that Turkish law deliberately separates the transfer of the receivable, the transfer of the debt, and the transfer of the whole contract.
The broader background is the principle of contractual freedom in Article 26 of the Turkish Code of Obligations, which allows parties to determine contractual content freely within legal limits. But that freedom is limited by Article 27, which invalidates contracts contrary to mandatory rules, morality, public order, personal rights, or impossible subject matter. In other words, parties can structure debt-assumption transactions broadly, but they still operate inside a mandatory legal framework.
This matters because debt assumption is not just a matter of commercial intention. Turkish law asks whether the correct legal model was chosen, whether the creditor’s role was respected, whether the legal consequences for securities and defenses were addressed, and whether the arrangement remains valid under the Code.
Internal Assumption of Debt
The first stage appears in Article 195, which regulates the internal assumption agreement. Under this provision, a person who enters into an internal assumption agreement with the debtor undertakes to release the debtor from the debt either by personally performing it or by assuming it with the creditor’s consent. The article also states that unless the debtor performs its obligations arising from the internal assumption agreement, it cannot require the other party to perform its corresponding obligation. If the debtor is not released from the debt, it may request security from the other party.
This is a very important distinction. Internal assumption is primarily an agreement between the old debtor and the new undertaker. By itself, it does not yet replace the debtor vis-à-vis the creditor. It creates an internal obligation to free the debtor, but the creditor is not automatically bound by that internal arrangement. In practice, this means that the old debtor may have a claim against the undertaker if the undertaker fails to do what it promised, but the creditor can still continue to treat the original debtor as the debtor until the outer legal step is completed.
This internal stage is common in group-company reorganizations and business sales. A buyer may promise the seller to take over certain liabilities, or a group company may promise another to discharge a debt. Under Turkish law, that promise matters internally, but it does not yet fully substitute the debtor in the creditor relationship.
External Assumption of Debt
The decisive outward step is regulated in Article 196. It states that replacement of the debtor and release of the old debtor take place through a contract concluded between the person assuming the debt and the creditor. The same article adds that notification of the internal assumption agreement to the creditor by the undertaker, or by the debtor with authorization, constitutes an offer to conclude the external assumption agreement. The creditor’s acceptance may be express or implied. The creditor is deemed to have accepted the assumption if it accepts the undertaker’s performance without reservation or consents to another act taken by that person in the capacity of debtor.
This is the core rule of assumption of debt under Turkish law. The external assumption agreement is what actually changes the debtor on the outside. Turkish law therefore gives the creditor a central role. Unlike assignment of receivables, where debtor consent is usually unnecessary, assumption of debt requires creditor acceptance because the creditor’s risk is directly affected by the identity and creditworthiness of the debtor.
The possibility of implied acceptance is commercially important. Turkish law does not always require a formal declaration saying, “I accept the new debtor.” Acceptance may be inferred if the creditor takes performance from the undertaker without reservation or otherwise treats that person as debtor. That makes actual conduct highly relevant in disputes. Where the parties did not sign a separate tri-partite document, later behavior may still prove that an external assumption was accepted.
Proposal and Time Limits for Acceptance
Article 197 addresses the binding force of the proposal. It states that the proposal regarding assumption of the debt may be accepted by the creditor at any time. However, the undertaker or the previous debtor may set a time limit for acceptance. If the creditor remains silent until that period expires, the proposal is deemed rejected. The article also adds that if, before acceptance, a second internal assumption agreement is concluded and a proposal is made to the creditor on the basis of that second arrangement, the first proposer is released from being bound by its earlier proposal.
This rule is useful in practice because negotiations over debt substitution often continue for some time. Turkish law avoids open-ended uncertainty by allowing the proposing side to impose a deadline. If the creditor does nothing until the period ends, the offer falls away. This gives the old debtor and the undertaker a way to avoid indefinite exposure while waiting for creditor consent.
The Consequences of Changing the Debtor
Once the debtor changes through valid external assumption, Turkish law regulates what happens to the surrounding legal position. Article 198 states that even if the debtor has changed, the creditor’s ancillary rights other than those specific to the debtor’s personality remain reserved. However, the liability of a third party who pledged security for the debt and the liability of a surety continue only if those persons consent in writing to the assumption of the debt.
This is a critical rule. Turkish law preserves the creditor’s accessory rights as a general matter, but it also protects third-party security providers and sureties from being bound indefinitely to a debt relationship that now has a different principal debtor. If they want their security or suretyship to continue after the debtor changes, written consent is required. In practice, this means that a debt-assumption transaction may unexpectedly weaken the creditor’s security package if the consent of guarantors or third-party collateral providers is not obtained.
This rule has substantial drafting consequences. In financing, leasing, and commercial supply arrangements, parties should never assume that collateral and surety structures will automatically survive debtor substitution in the same strength. Turkish law says they survive only in the qualified form stated in Article 198.
Defenses Available to the New Debtor
Article 199 regulates defenses after the debt is assumed. It states that the right to assert defenses related to the assumed debt passes to the new debtor. But unless otherwise agreed in the external assumption agreement, the new debtor cannot assert against the creditor the personal defenses that the previous debtor could have asserted. The article also adds that the new debtor cannot assert against the creditor defenses arising from the internal assumption agreement.
This provision is very important for litigation and risk assessment. Turkish law distinguishes between defenses linked to the debt itself and defenses personal to the old debtor. The new debtor generally receives the former, but not automatically the latter. Also, disputes arising purely from the internal arrangement between old debtor and undertaker do not become defenses against the creditor. This preserves the creditor’s position and keeps internal allocation disputes from spilling into the external obligation.
Commercially, that means the undertaker should conduct careful due diligence not only on the debt amount and maturity, but also on what defenses exist and whether they are transferable in the legal sense recognized by Article 199.
Nullity of the Assumption Agreement
Turkish law also regulates what happens if the external assumption agreement later proves invalid. Article 200 states that if the external assumption agreement becomes null and void, the old debt continues to exist together with all its ancillary debts, without prejudice to the rights of bona fide third parties. It further states that unless the undertaker proves that no fault can be attributed to it regarding the nullity of the assumption agreement and the creditor’s loss, the creditor may demand compensation for the damage suffered because of loss of prior security or for any other reason.
This rule is commercially significant because it protects the creditor against a failed debtor-substitution transaction. If the outward assumption collapses, the original debt revives or continues with its accessory structure. At the same time, the creditor may have a separate damages claim against the undertaker if the invalidity caused loss and the undertaker cannot prove lack of fault. Turkish law therefore does not leave the creditor exposed when the debtor-replacement mechanism fails.
This also shows why assumption-of-debt documents must be drafted carefully. Invalidity risk does not simply create theoretical uncertainty. It can revive the old debt, affect securities, and create a secondary compensation dispute.
Participation in Debt
A different model appears in Article 201, which regulates participation in debt. This is a contract concluded between the participant and the creditor in order to take part in an existing debt alongside the debtor, resulting in the participant being liable together with the debtor. The article states that the participant and the debtor become jointly and severally liable to the creditor.
Participation in debt is not the same as assumption of debt. In assumption of debt, the old debtor is normally replaced and released. In participation in debt, the original debtor remains, and another person joins the debt side. This can be very useful where the creditor does not want to lose the original debtor but wants additional payment strength. In practical terms, it is a strengthening mechanism rather than a substitution mechanism.
Acquisition of Assets or Business
One of the most commercially important special rules is Article 202, covering the acquisition of assets or a business together with assets and liabilities. It states that the transferee becomes liable to creditors for the debts in the transferred asset or business from the date on which it notifies the creditors or announces the transfer through the Trade Registry Gazette for commercial enterprises and through a nationally distributed newspaper for others. For a period of two years, the previous debtor remains jointly and severally liable with the transferee. This period runs from the date of notification or announcement for due debts and from maturity for debts falling due later. The article also states that the consequences are identical to those arising from an external assumption contract, and that the two-year period does not start unless the notice or announcement obligation is fulfilled by the transferee.
This is a major rule for mergers, asset deals, business transfers, and carve-outs. Turkish law does not treat transfer of a business as a purely internal bargain between seller and buyer. It builds creditor protection into the process by preserving the old debtor’s joint and several liability for a defined period. That makes Article 202 one of the most practical debt-assumption provisions in Turkish commercial life.
From a transaction-planning perspective, Article 202 affects due diligence, indemnity drafting, creditor-notification planning, and the timeline of residual liability. It also means that a buyer acquiring a Turkish business should not assume that liabilities remain only on the seller’s side until specific novations are signed. Turkish law can shift liability through the statutory mechanism described in Article 202.
Mergers and Changes in Business Form
Article 203 extends the same protective approach to certain structural reorganizations. It states that if an enterprise is merged with another by mutual acquisition of assets and liabilities or by one joining the other, the creditors of both enterprises have the rights arising from acquisition of an asset and may receive their receivables from the new enterprise. The same rule also applies to the debts of a sole proprietorship converted into a collective or limited partnership.
This provision shows that Turkish law treats debt continuity seriously in reorganizations. Creditors are not expected to bear the risk that a structural change will make collection harder. The new enterprise becomes the creditor-facing center of liability, and the special rules on acquired business debt apply.
Reservation of Special Provisions
Article 204 adds that special provisions regarding assumption of debt in the division of inheritance and the transfer of mortgaged immovables are reserved. This means the general debt-assumption rules do not eliminate more specific statutory frameworks applying in particular subject areas.
The practical lesson is that Article 195 onward is the general regime, but sector-specific or subject-specific law may still override or supplement it. In real estate, inheritance, and other special areas, the legal analysis should not stop with the general provisions alone.
Assumption of Debt Versus Contract Assignment
Turkish law’s distinction between debt assumption and contract assignment is especially important. Article 205 states that assignment of a contract is an agreement between the assignee, the assignor, and the remaining party to the contract, transferring to the assignee all the assignor’s rights and obligations together with party status. The article also states that an agreement between assignor and assignee based on prior authorization or later approval by the remaining party is also subject to the rules on assignment of contract, and that the validity of contract assignment depends on the form of the assigned contract.
This shows why not every “transfer of rights under a contract” is truly just a debt assumption. If the commercial goal is full party substitution, including both rights and obligations, the legal model is contract assignment rather than debt assumption alone. By contrast, debt assumption changes only the debtor side. In practice, many cross-border contracts use generic wording like “the contract shall be transferred,” but under Turkish law that wording should be unpacked carefully.
Consumer-Law Note
Debt-side structuring can also interact with Turkish consumer law. The official English text of the Consumer Protection Law states that in consumer transactions, personal guarantees obtained in return for acts of the consumer are deemed ordinary guarantees, while personal guarantees given by the other party regarding consumer receivables are deemed joint guarantees unless another law provides otherwise. Although this is not the main debt-assumption regime, it is a reminder that sector-specific protective rules may affect how liabilities and guarantees are treated in consumer-facing contexts.
Practical Drafting Lessons
A well-drafted Turkish-law transaction should first identify the right mechanism. If the goal is only to move the debt side, Articles 195 to 204 are central. If the goal is to move the whole contract, Article 205 should usually be considered. If the aim is to add an extra liable party rather than replace the old one, Article 201 on participation in debt may be more appropriate.
Second, creditor consent should never be assumed away. The central rule of Article 196 makes creditor acceptance the decisive outward step. Where parties act as if the debtor has already changed without securing that external agreement, they risk building a structure that works only internally between themselves but not against the creditor.
Third, security analysis is essential. Article 198 makes clear that third-party pledgors and sureties continue only with written consent. In finance and leasing transactions, this can have major value implications.
Fourth, business transfers should be handled with Article 202 in mind. Notification and announcement affect when liability attaches and when the old debtor’s two-year co-liability period starts to run. Missing those steps can prolong uncertainty and alter risk allocation.
Conclusion
Assumption of debt under Turkish law is a structured institution, not a loose commercial label. The Turkish Code of Obligations separates internal assumption from external assumption, requires creditor participation for true debtor substitution, preserves ancillary rights while protecting sureties and third-party security providers, transfers only certain defenses to the new debtor, and regulates what happens if the assumption later proves invalid. It also provides separate mechanisms for participation in debt, business transfers, mergers, and full contract assignment.
The practical takeaway is simple. Under Turkish law, changing the debtor is more legally sensitive than changing the creditor. The strongest transaction structure is the one that correctly classifies the mechanism, secures the necessary creditor role, addresses collateral and defenses explicitly, and coordinates the debt-side change with any broader contract-transfer objectives.
FAQ
Does debt assumption require creditor consent in Turkey?
Yes, for true debtor substitution. Under Article 196, replacement of the debtor and release of the old debtor occur through a contract between the undertaker and the creditor.
What is the difference between internal and external assumption of debt?
Internal assumption under Article 195 is an arrangement between the old debtor and the undertaker. External assumption under Article 196 is the creditor-facing agreement that actually changes the debtor.
Can creditor acceptance be implied?
Yes. Article 196 states that acceptance may be express or implied, and that accepting performance without reservation or otherwise treating the undertaker as debtor can amount to acceptance.
What happens to sureties and third-party collateral after debt assumption?
Under Article 198, they continue only if the relevant third party or surety gives written consent to the assumption of debt.
Can the new debtor raise all defenses of the old debtor?
Not all. Under Article 199, defenses related to the debt pass to the new debtor, but personal defenses of the previous debtor do not pass automatically unless otherwise agreed in the external assumption agreement.
What if the assumption agreement is later invalid?
Article 200 states that the old debt continues with its ancillary obligations, subject to the rights of good-faith third parties, and the creditor may in some cases claim damages from the undertaker.
Is acquisition of a business treated like assumption of debt?
In an important sense, yes. Article 202 states that the transferee of an asset or business together with its assets and liabilities becomes liable to creditors upon proper notification or announcement, and the old debtor remains jointly and severally liable for two years.
Is assumption of debt the same as contract assignment?
No. Debt assumption changes only the debtor side. Contract assignment under Article 205 transfers the whole contractual position, including both rights and obligations, together with party status.
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