Accommodation parties

Question 1

Liability of accommodation parties

Answer 1

No requirement that creditor try to collect from primary debtor prior to surety unless the phrase “collection guaranteed” is included when surety signs instrument

Question 2

Defenses for accommodation party when sued by creditor

Answer 2

1. Primary debtor’s defenses (except bankruptcy, infancy, or incapacity)
2. Creditor’s extension of debtor’s time to pay contract
3. Other material modification of contract between debtor and creditor
4. Impairment of collateral securing contract between creditor and debtor

Question 3

Rights available to accommodation party if sued by creditor

Answer 3

1. Reimbursement from primary debtor

2. common law rights (exoneration, subrogation)