Accomodation parties

Question 1

Surety/Grantor

Answer 1

a person who incurs an obligation without receiving a direct benefit

Question 2

Liability of accommodation party

Answer 2

1) liable in capacity in which instrument is signed
2) no requirement that creditor try and collect from debtor prior to trying to collect from surety
3) unless “collection guaranteed” is included when surety signs instrument

Question 3

Defenses to Liability of accommodation party

Answer 3

1) primary debtor’s defenses

2) special surety defenses

Question 4

Defense to payment good to the extent that surety is caused loss by…

Answer 4

1) creditor’s extension of debtor’s time to pay contract
2) other material modifications to contract between debtor and creditor
3) impairment of collateral securing contract between debtor and creditor

Question 5

Rights available to accommodation party is sued by creditor

Answer 5

1) reimbursement from primary debtor

2) common law rights of exoneration and subrogation