Ohio Code 1303.59 – Instruments signed for accommodation – UCC 3-419
(A) If an instrument is issued for value given for the benefit of a party to the instrument and another party to the instrument signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party “for accommodation.”
Terms Used In Ohio Code 1303.59
- Acceptor: means a drawee who has accepted a draft. See Ohio Code 1303.01
- Accommodated party: means the party to an instrument for the benefit of which the instrument is issued for value. See Ohio Code 1303.59
- Accommodation party: means a party to an instrument other than the accommodated party. See Ohio Code 1303.59
- Another: when used to designate the owner of property which is the subject of an offense, includes not only natural persons but also every other owner of property. See Ohio Code 1.02
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Drawer: means a person who signs or is identified in a draft as a person ordering payment. See Ohio Code 1303.01
- Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. Source: OCC
- Maker: means a person who signs or is identified in a note as a person undertaking to pay. See Ohio Code 1303.01
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Party: means a party to an instrument. See Ohio Code 1303.01
- Person: includes an individual, corporation, business trust, estate, trust, partnership, and association. See Ohio Code 1.59
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
- Statute: A law passed by a legislature.
(B) An accommodation party may sign the instrument as maker, drawer, acceptor, or indorser and, subject to division (D) of this section, is obliged to pay the instrument in the capacity in which the accommodation party signs. The obligation of an accommodation party may be enforced notwithstanding any statute of frauds and whether or not the accommodation party receives consideration for the accommodation.
(C) A person signing an instrument is presumed to be an accommodation party, and there is notice that the instrument is signed for accommodation if the signature is an anomalous indorsement or is accompanied by words indicating that the signer is acting as surety or guarantor with respect to the obligation of another party to the instrument. Except as provided in section 1303.70 of the Revised Code, the obligation of an accommodation party to pay the instrument is not affected by the fact that the person enforcing the obligation had notice when the instrument was taken by that person that the accommodation party signed the instrument for accommodation.
(D) If the signature of a party to an instrument is accompanied by words indicating unambiguously that the party is guaranteeing collection rather than payment of the obligation of another party to the instrument, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument only if one of the following applies:
(1) Execution of judgment against the other party has been returned unsatisfied.
(2) The other party is insolvent or in an insolvency proceeding.
(3) The other party cannot be served with process.
(4) It is otherwise apparent that payment cannot be obtained from the other party.
(E) If the signature of a party to an instrument is accompanied by words indicating that the party guarantees payment or the signer signs the instrument as an accommodation party in some other manner that does not unambiguously indicate an intention to guarantee collection rather than payment, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument in the same circumstances as the accommodated party would be obliged, without prior resort to the accommodated party by the person entitled to enforce the instrument.
(F) An accommodation party who pays the instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party. In proper circumstances, an accommodation party may obtain relief that requires the accommodated party to perform its obligations on the instrument. An accommodated party who pays the instrument has no right of recourse against, and is not entitled to contribution from, an accommodation party.
(G) As used in this chapter :
(1) “Accommodated party” means the party to an instrument for the benefit of which the instrument is issued for value.
(2) “Accommodation party” means a party to an instrument other than the accommodated party.