accommodation party


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Related to accommodation party: accommodation endorser

Accommodation Party

One who signs a Commercial Paper for the purpose of lending his or her name and credit to another party to the document—the accommodated party—to help that party obtain a loan or an extension of credit.

A person wanting to obtain a car loan, for example, may offer a finance company a promissory note for the amount of the requested loan, promising to repay the amount over a number of years. If the company does not consider the person a good credit risk (one who will be able to repay the loan), it will request that someone else sign the note to ensure that the company will be repaid. Such a person may be an accommodation endorser, because he or she endorses the note after it has been completed, or an accommodation maker, because he or she must sign the note with the accommodation party.

An accommodation party is liable to the person or business that extended credit to theaccommodation party, but not to the accommodated party. The accommodation party is liable for the amount specified on the accommodation paper. If an accommodation party repays the debt, he or she can seek reimbursement from the accommodated party.

accommodation party

see ACCOMMODATION BILL.
References in periodicals archive ?
First, the accommodation party acquired title to the intended replacement property before the Sept.
In the second format, the accommodation party simply purchases the replacement property and holds it until the taxpayer sells the relinquished property.
The accommodation party will seldom provide the temporary financing needed to acquire the replacement property and to park it or the relinquished property.