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Accommodation Party
Source: Encyclopedia of Banking & Finance (9h Edition) by Charles J Woelfel
(We recommend this as work of authority.)

A party to a negotiable instrument who signs a note or bill as maker, acceptor, or endorser, to accommodate another party and enhance the credit worthiness of the paper.

The Uniform Negotiable Instruments Law (Art. II, Sec. 29) specified that an accommodation party is one who thus signed an instrument "without receiving value therefore."

The Uniform Commercial Code (Sec. 3-415(1)) has eliminated such reference to non receipt of consideration as the distinguishing feature of an accommodation party.  It is no longer determining that he signed gratuitously.  The accommodation party is a surety or guarantor whose obligation is supported by any consideration for which the instrument is taken before due.  If he signs as accommodation maker or acceptor, the accommodation party is bound without prior resort to his principal.  If he signs as accommodation endorser, he is bound only after presentment, notice of dishonor, and protest.  But the accommodation party who pays the instrument becomes subrogated to the rights of the holder paid, as surety, as to recourse on the instrument.


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