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The liability of partners in ordinary partnerships, which determines the extent to which the partners are liable for debts assumed towards third parties within the framework of the partnership relationship and which defences and objections they may raise, is the subject of this article. Ordinary partnerships are among the types of company most frequently encountered in commercial life, both because of the ease of their formation and the freedom they afford the parties, and they also form the basis of all types of company. In this article we discuss the definition of an ordinary partnership, the partners’ liability towards third parties, the defences and objections that may be raised and the extinction of the debt.
The ordinary partnership is defined in Article 620 TCO as follows: “An ordinary partnership agreement is a contract whereby two or more persons undertake to combine their efforts and assets to achieve a common purpose.“ is defined as follows.
Turkish Code of Obligations, Art. 620
It has no legal personality; accordingly, the partners are joint owners (elbirliği) of the partnership assets. For this reason, the partners are compulsory joint litigants.
Each partner is obliged to contribute capital towards achieving the purpose of the ordinary partnership. This capital may consist of money, receivables or property, as well as labour. Unless otherwise provided, each partner is obliged to contribute capital in equal shares.
Liability for debts assumed towards third parties in ordinary partnerships is regulated in Article 638 TCO “The partners shall be jointly and severally liable, unless otherwise agreed, for debts which they have assumed towards a third party, together or through a representative, within the framework of the partnership relationship.” as provided above.
Turkish Code of Obligations, Art. 638
Therefore, unless otherwise agreed, partners in an ordinary partnership are jointly and severally liable for debts they have assumed towards third parties within the framework of the partnership.
In ordinary partnerships, the partners are directly and unlimitedly liable for debts with all their assets.
In joint and several liability, as regards the external relationship, the debt of each debtor is independent of the others. Each joint and several debtor is obliged to perform the whole debt or the part claimed, in whatever manner the creditor has claimed it.
Pursuant to Article 163/2 TCO, the liability of joint and several debtors continues until the whole debt has been extinguished.
As stated above, in an ordinary partnership the partners are liable for debts in equal shares unless they agree otherwise. However, this applies only in the internal relationship; in the external relationship, the partners are liable to creditors for the whole debt. A partner who pays more than his or her share of the debt in the internal relationship has a right of recourse against the other partners.
External relationship · Towards creditors
The partners are liable to the creditors for the entire debt.
Internal relationship · Between partners
Unless otherwise agreed, the partners are liable in equal shares; a partner who pays more than their share has a right of recourse against the other partners.
The defences and objections available to debtors in joint and several liability are regulated in Article 164 TCO. Accordingly;
“A joint and several debtor may raise against the creditor only those defences and objections arising from the personal relationship between them or from the cause or subject matter of the joint and several obligation. “ (Personal Defences and Objections)
Turkish Code of Obligations, Art. 164/1
“A joint and several debtor who fails to raise common defences and objections shall be liable towards the others.” (Common Defences and Objections)
Turkish Code of Obligations, Art. 164/2
Under Article 164/1 TCO, the legislature has characterised the defences and objections arising from the cause or subject matter of the debt as defences and objections common to all debtors. Accordingly, defences and objections to the effect that the debt never arose, or that it arose but has since been extinguished, are common defences and objections.
Examples of defences and objections to the effect that the debt never arose include the creditor’s lack of capacity, the transaction giving rise to the debt being contrary to morality or mandatory provisions, the performance of the debt being impossible, the transaction not having been made in the prescribed form, or the non-fulfilment of a condition precedent set for the creation of the debt in respect of all debtors.
Examples of defences and objections to the effect that the debt has been extinguished include the release of all debtors, the performance having been deposited pursuant to Article 107 TCO, the debt having been extinguished for all debtors by reason of impossibility without fault or having become time-barred, the debt not being due, the defence of non-performance, and the debt having been extinguished in whole or in part by performance.
Relating to the debt never having arisen
Relating to the debt having been extinguished
Where there is a common defence or objection relating to the debt, all debtors may raise it and, indeed, under Art. 164/2 of the TBK it will be in their interest to do so. Otherwise, a debtor who fails to raise a common defence or objection will be liable to the other debtors.
Important · Loss of the right of recourse
Liability here means not so much liability to pay compensation as the loss, in the internal relationship, of the right of recourse against the other partners after performance of the debt. In this context, raising common defences and objections constitutes an obligation for each jointly and severally liable debtor.
Personal defences and objections are those arising solely from the relationship between the creditor and a particular debtor. Since the debts of joint and several debtors are independent of each other, each debtor may have personal defences and objections arising from its relationship with the creditor. Personal defences and objections may be raised only by the debtor who has the ground for that defence or objection. Accordingly, the other debtors cannot rely on a personal defence that does not concern them.
Examples of personal defences and objections include one of the debtors exercising a right of avoidance on the ground of a defect of consent, the debtor’s lack of capacity, the debt not being due, the debtor setting off the debt against a personal claim, and the debtor having been released by the creditor.
Since in joint and several liability the debt of each debtor is independent of the others, the defence of limitation also arises as a personal defence. Article 155/1 TCO provides that, where the limitation period is interrupted against one of the joint and several debtors, it is deemed to be interrupted against the other debtors as well.
A joint and several debt may be extinguished by performance, and also by reasons other than performance, such as expiry of a peremptory period, subsequent impossibility without fault, merger of the capacities of creditor and debtor, release, expiry of the limitation period and novation.
Extinction by performance
Where the debt is extinguished by performance, this has effect for all jointly and severally liable debtors.
Grounds other than performance
Where the debt is extinguished for reasons other than performance, however, the extinction as a rule has effect only for the debtor in whose person the relevant reason has arisen. If the relevant reason has arisen for all debtors, it will then have effect for all partners. For example, if the limitation period has expired for all debtors, it will have effect for all partners.
Related legislation: Turkish Code of Obligations No. 6098 (mevzuat.gov.tr)
Under Art. 638 of the TBK, unless otherwise agreed, the partners are jointly and severally liable for debts they have assumed towards third parties within the framework of the partnership relationship, whether together or through a representative. According to the article, this liability is direct and unlimited, extending to all their assets.
No. An ordinary partnership has no legal personality; therefore the partners own the partnership assets jointly.
Borcun sebep ya da konusundan kaynaklanan, yani borcun hiç doğmadığına veya sona erdiğine ilişkin def’i ve itirazlardır. TBK m. 164/2 uyarınca bunları ileri sürmeyen borçlu diğer borçlulara karşı sorumlu olur; makaleye göre bu, iç ilişkide rücu hakkının kaybedilmesi anlamına gelir.
Şahsi def’i ve itirazlar alacaklı ile yalnızca ilgili borçlu arasındaki ilişkiden doğar ve sadece o borçlu tarafından ileri sürülebilir; diğer borçlular kendilerine ilişkin olmayan şahsi def’i sebebine dayanamaz.
Yes. According to the article, although in the external relationship the partners are liable for the entire debt, in the internal relationship they are liable in equal shares unless otherwise agreed; a partner who pays more than its share has a right of recourse against the other partners.
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