Novation

A new payment plan or instrument does not always mean the original debt has ended. Novation requires an intention to extinguish the old obligation and create a new one in its place. This is assessed through the contract's content and transaction circumstances, rather than assumption.

Continuing the Old Obligation or Replacing It?

The intention required for novation must be established under Article 133 of the Turkish Code of Obligations. Extending maturity, changing payment method, or issuing an instrument for an existing debt is generally insufficient alone. The fate of the old claim, rights retained, and source of the new debt must be clear. Earlier correspondence may help explain that intention.

Security and Ancillary Rights

Extinguishing the old debt may affect security such as suretyship or a pledge. The debtor's and creditor's agreement alone cannot impose new or increased liability on a third party. Interest, contractual penalties, and limitation commencement also require separate assessment. When signing a new instrument, the fate of earlier debt documents and security must therefore not be overlooked.

How Is the New Document Examined?

The old contract, new agreement, instruments, and intervening payments must be compared. The risk of enforcing the same debt twice through different documents must be prevented. We examine the basis of alleged novation and whether the arrangement is merely restructuring, clearly identifying rights intended to be preserved or extinguished before signing.

Documents That May Be Prepared for the Initial Review

• The old debt agreement
• The new agreement and instruments
• Security documents
• Interim payments and correspondence

Submit Your Matter

File review and representation are paid services. Scope and fees are agreed in writing before work begins.