Endorsement for collection is a transaction frequently encountered in Turkish Commercial Law and often confused with an endorsement for assignment. In this article, questions such as “what is an endorsement for collection?”, “how does it differ from an endorsement for assignment?”, “what are the consequences of an endorsement for collection?” are answered in light of the Court of Cassation’s decisions, and the legal points to be noted on this matter are explained.
Definition and Purpose of Endorsement for Collection
An endorsement for collection, without transferring the ownership of the right arising from the instrument, is a transaction that grants the authority to collect the amount of the instrument and perform related actions on behalf of the endorser to the person holding the instrument (holder). As stated by the Court of Cassation, “an endorsement for collection is not a transaction for the purpose of transferring the rights arising from the instrument, but rather a transaction that establishes the necessary power of attorney and authority to collect these rights on behalf of the endorser” (Court of Cassation – 19th Civil Chamber – 2012/9143-2013/5417). With this endorsement, the holder becomes the agent of the endorser.
Legal Basis and Formal Requirement: For an endorsement to be considered an “open” endorsement for collection, certain phrases must be present on the instrument. According to the Turkish Commercial Code (TCC), these phrases “’for collection’, ‘by procuration’, ‘for receipt’ or a note indicating that the value will be accepted on behalf of another, or merely a record expressing a mandate” must be included. The presence of these records clearly reveals the purpose of the endorsement for collection.
Difference from an Endorsement for Transfer: The distinction most frequently emphasized in court decisions is between an endorsement for collection and an endorsement for transfer. If the endorsement does not contain the aforementioned phrases indicating collection, it is considered an “endorsement for transfer”. According to the Court of Appeals, “Endorsements that do not contain phrases such as ‘for collection’, ‘by procuration’ or similar where the endorsement signature is placed must be accepted as endorsements for transfer” (Court of Appeals-19th Civil Chamber-2015/11371-2016/2463). While an endorsement for transfer passes all rights arising from the instrument and its ownership to the transferee, in an endorsement for collection, ownership remains with the endorser.
Non-Transfer of Ownership and the Status of “Agent Holder”: The most fundamental consequence of an endorsement for collection is the non-transfer of ownership. In a decision by the General Assembly of Civil Chambers of the Court of Appeals, this situation was stated as, “Ownership remained with the endorser despite the endorsement” (Court of Appeals-General Assembly of Civil Chambers-2020/329-2022/1490). Therefore, the person who receives the instrument with an endorsement for collection acts as an “agent holder” and is obliged to collect the instrument on behalf and for the account of the endorser.
Open and Covert (Secret) Endorsement for Collection: Decisions state that an endorsement for collection can be “open” or “covert (secret)” . An open endorsement is evident from the annotations on the instrument. A covert (secret) endorsement, on the other hand, appears to be an endorsement for transfer (assignment) but, in the internal relationship between the parties, there is an agreement that it was made for collection purposes. In one decision, it is stated: “If a secret endorsement for collection is made solely for the purpose of authorizing the collection of the instrument’s value and its delivery to the endorser, the endorser remains the owner and creditor of the instrument” (Supreme Court-12th Civil Chamber-2014/19229-2014/27579). However, the party claiming the existence of a covert endorsement must prove it with written evidence.
Rights and Obligations of the Holder: The “agent holder” who acquires the instrument through an endorsement for collection can exercise all rights arising from the instrument. In this context, they can file a lawsuit against the debtor and initiate enforcement proceedings. Furthermore, as stated in a Supreme Court decision, the agent holder “is authorized to file an action for cancellation due to the loss of the check” (Supreme Court-11th Civil Chamber-2015/15123-2017/2747). However, the agent holder’s authority is limited; they can only transfer the instrument with a new “endorsement for collection” (RCA-Antalya Regional Court of Justice 11th Civil Chamber-2025/125-2025/113). Their most important obligation is to deliver the collected amount to the original creditor, the endorser.
Debtor’s Status and Raising Defenses: One of the most critical consequences of an endorsement for collection is that it affects the legal status of the debtor. Since ownership remains with the endorser, the debtor can also raise personal defenses (objections) that can be raised against the endorser, against the holder acting as an agent who holds the instrument for collection. Indeed, in a court decision, this principle was clearly stated: “According to Article 600 of the eTTK No. 6762, defenses that can be raised against the endorser can also be raised against the holder” (First Instance-Izmir 4th Civil Court of Commerce-2020/283-2022/644). This situation is a fundamental characteristic that distinguishes an endorsement for collection from an endorsement for assignment, which protects the holder against personal defenses.
In conclusion, in judicial practice, for an endorsement to be considered for collection purposes, the presence of clear expressions on the instrument such as “for collection” or “by proxy” is of critical importance. In the absence of such expressions, the endorsement is presumed to be an “endorsement for assignment” transferring ownership, and the party claiming otherwise bears a heavy burden of proof. Therefore, for parties wishing to benefit from the legal consequences of an endorsement for collection, clearly stating this purpose on the instrument is of great importance for preventing potential disputes. An article suggestion.
Why is an Expert Tuzla Lawyer’s Opinion Necessary? – Professional Support in Endorsement for Collection Cases
Although an endorsement for collection may seem like a simple transaction at first glance, confusing it with an endorsement for assignment can lead to serious problems such as invalidity of the negotiable instrument, cancellation of enforcement proceedings, and wrongful collection. Especially in disputes regarding the collection of checks and bills of exchange, an evaluation must be made in line with negotiable instruments law, agency relationship, and Supreme Court decisions. A wrongly placed signature or an incomplete phrase can lead to the loss of your rights.
Therefore;
✅ Applying the correct type of endorsement on the negotiable instrument
✅ Examining the legal basis before initiating a lawsuit/enforcement proceeding as an agent holder
✅ Assessing which defenses the debtor party can raise
for which, seeking support from an expert lawyer in the field of negotiable instruments and commercial law is critically important. An expert Tuzla lawyer, especially in regions with high commercial activity such as Tuzla, Kartal, and Pendik, proactively identifies errors frequently encountered in practice, thereby ensuring the legal security of the parties and minimizing risks. A suggested article on this topic.
