§ 8.3A-605. Discharge of endorsers and accommodation parties.
(a) In this section, the term "endorser" includes a drawer having theobligation described in § 8.3A-414 (d).
(b) Discharge, under § 8.3A-604, of the obligation of a party to pay aninstrument does not discharge the obligation of an endorser or accommodationparty having a right of recourse against the discharged party.
(c) If a person entitled to enforce an instrument agrees, with or withoutconsideration, to an extension of the due date of the obligation of a partyto pay the instrument, the extension discharges an endorser or accommodationparty having a right of recourse against the party whose obligation isextended to the extent the endorser or accommodation party proves that theextension caused loss to the endorser or accommodation party with respect tothe right of recourse.
(d) If a person entitled to enforce an instrument agrees, with or withoutconsideration, to a material modification of the obligation of a party otherthan an extension of the due date, the modification discharges the obligationof an endorser or accommodation party having a right of recourse against theperson whose obligation is modified to the extent the modification causesloss to the endorser or accommodation party with respect to the right ofrecourse. The loss suffered by the endorser or accommodation party as aresult of the modification is equal to the amount of the right of recourseunless the person enforcing the instrument proves that no loss was caused bythe modification or that the loss caused by the modification was an amountless than the amount of the right of recourse.
(e) If the obligation of a party to pay an instrument is secured by aninterest in collateral and a person entitled to enforce the instrumentimpairs the value of the interest in collateral, the obligation of anendorser or accommodation party having a right of recourse against theobligor is discharged to the extent of the impairment. The value of aninterest in collateral is impaired to the extent (i) the value of theinterest is reduced to an amount less than the amount of the right ofrecourse of the party asserting discharge, or (ii) the reduction in value ofthe interest causes an increase in the amount by which the amount of theright of recourse exceeds the value of the interest. The burden of provingimpairment is on the party asserting discharge.
(f) If the obligation of a party is secured by an interest in collateral notprovided by an accommodation party and a person entitled to enforce theinstrument impairs the value of the interest in collateral, the obligation ofany party who is jointly and severally liable with respect to the securedobligation is discharged to the extent the impairment causes the partyasserting discharge to pay more than that party would have been obliged topay, taking into account rights of contribution, if impairment had notoccurred. If the party asserting discharge is an accommodation party notentitled to discharge under subsection (e), the party is deemed to have aright to contribution based on joint and several liability rather than aright to reimbursement. The burden of proving impairment is on the partyasserting discharge.
(g) Under subsection (e) or (f), impairing value of an interest in collateralincludes (i) failure to obtain or maintain perfection or recordation of theinterest in collateral, (ii) release of collateral without substitution ofcollateral of equal value, (iii) failure to perform a duty to preserve thevalue of collateral owed, under Title 8.9A or other law, to a debtor orsurety or other person secondarily liable, or (iv) failure to comply withapplicable law in disposing of collateral.
(h) An accommodation party is not discharged under subsection (c), (d), or(e) unless the person entitled to enforce the instrument knows of theaccommodation or has notice under § 8.3A-419 (c) that the instrument wassigned for accommodation.
(i) A party is not discharged under this section if (i) the party assertingdischarge consents to the event or conduct that is the basis of thedischarge, or (ii) the instrument or a separate agreement of the partyprovides for waiver of discharge under this section either specifically or bygeneral language indicating that parties waive defenses based on suretyshipor impairment of collateral.
(Code 1950, § 6-473; 1964, c. 219, § 8.3-606; 1992, c. 693.)
§ 8.3A-605. Discharge of endorsers and accommodation parties.
(a) In this section, the term "endorser" includes a drawer having theobligation described in § 8.3A-414 (d).
(b) Discharge, under § 8.3A-604, of the obligation of a party to pay aninstrument does not discharge the obligation of an endorser or accommodationparty having a right of recourse against the discharged party.
(c) If a person entitled to enforce an instrument agrees, with or withoutconsideration, to an extension of the due date of the obligation of a partyto pay the instrument, the extension discharges an endorser or accommodationparty having a right of recourse against the party whose obligation isextended to the extent the endorser or accommodation party proves that theextension caused loss to the endorser or accommodation party with respect tothe right of recourse.
(d) If a person entitled to enforce an instrument agrees, with or withoutconsideration, to a material modification of the obligation of a party otherthan an extension of the due date, the modification discharges the obligationof an endorser or accommodation party having a right of recourse against theperson whose obligation is modified to the extent the modification causesloss to the endorser or accommodation party with respect to the right ofrecourse. The loss suffered by the endorser or accommodation party as aresult of the modification is equal to the amount of the right of recourseunless the person enforcing the instrument proves that no loss was caused bythe modification or that the loss caused by the modification was an amountless than the amount of the right of recourse.
(e) If the obligation of a party to pay an instrument is secured by aninterest in collateral and a person entitled to enforce the instrumentimpairs the value of the interest in collateral, the obligation of anendorser or accommodation party having a right of recourse against theobligor is discharged to the extent of the impairment. The value of aninterest in collateral is impaired to the extent (i) the value of theinterest is reduced to an amount less than the amount of the right ofrecourse of the party asserting discharge, or (ii) the reduction in value ofthe interest causes an increase in the amount by which the amount of theright of recourse exceeds the value of the interest. The burden of provingimpairment is on the party asserting discharge.
(f) If the obligation of a party is secured by an interest in collateral notprovided by an accommodation party and a person entitled to enforce theinstrument impairs the value of the interest in collateral, the obligation ofany party who is jointly and severally liable with respect to the securedobligation is discharged to the extent the impairment causes the partyasserting discharge to pay more than that party would have been obliged topay, taking into account rights of contribution, if impairment had notoccurred. If the party asserting discharge is an accommodation party notentitled to discharge under subsection (e), the party is deemed to have aright to contribution based on joint and several liability rather than aright to reimbursement. The burden of proving impairment is on the partyasserting discharge.
(g) Under subsection (e) or (f), impairing value of an interest in collateralincludes (i) failure to obtain or maintain perfection or recordation of theinterest in collateral, (ii) release of collateral without substitution ofcollateral of equal value, (iii) failure to perform a duty to preserve thevalue of collateral owed, under Title 8.9A or other law, to a debtor orsurety or other person secondarily liable, or (iv) failure to comply withapplicable law in disposing of collateral.
(h) An accommodation party is not discharged under subsection (c), (d), or(e) unless the person entitled to enforce the instrument knows of theaccommodation or has notice under § 8.3A-419 (c) that the instrument wassigned for accommodation.
(i) A party is not discharged under this section if (i) the party assertingdischarge consents to the event or conduct that is the basis of thedischarge, or (ii) the instrument or a separate agreement of the partyprovides for waiver of discharge under this section either specifically or bygeneral language indicating that parties waive defenses based on suretyshipor impairment of collateral.
(Code 1950, § 6-473; 1964, c. 219, § 8.3-606; 1992, c. 693.)
§ 8.3A-605. Discharge of endorsers and accommodation parties.
(a) In this section, the term "endorser" includes a drawer having theobligation described in § 8.3A-414 (d).
(b) Discharge, under § 8.3A-604, of the obligation of a party to pay aninstrument does not discharge the obligation of an endorser or accommodationparty having a right of recourse against the discharged party.
(c) If a person entitled to enforce an instrument agrees, with or withoutconsideration, to an extension of the due date of the obligation of a partyto pay the instrument, the extension discharges an endorser or accommodationparty having a right of recourse against the party whose obligation isextended to the extent the endorser or accommodation party proves that theextension caused loss to the endorser or accommodation party with respect tothe right of recourse.
(d) If a person entitled to enforce an instrument agrees, with or withoutconsideration, to a material modification of the obligation of a party otherthan an extension of the due date, the modification discharges the obligationof an endorser or accommodation party having a right of recourse against theperson whose obligation is modified to the extent the modification causesloss to the endorser or accommodation party with respect to the right ofrecourse. The loss suffered by the endorser or accommodation party as aresult of the modification is equal to the amount of the right of recourseunless the person enforcing the instrument proves that no loss was caused bythe modification or that the loss caused by the modification was an amountless than the amount of the right of recourse.
(e) If the obligation of a party to pay an instrument is secured by aninterest in collateral and a person entitled to enforce the instrumentimpairs the value of the interest in collateral, the obligation of anendorser or accommodation party having a right of recourse against theobligor is discharged to the extent of the impairment. The value of aninterest in collateral is impaired to the extent (i) the value of theinterest is reduced to an amount less than the amount of the right ofrecourse of the party asserting discharge, or (ii) the reduction in value ofthe interest causes an increase in the amount by which the amount of theright of recourse exceeds the value of the interest. The burden of provingimpairment is on the party asserting discharge.
(f) If the obligation of a party is secured by an interest in collateral notprovided by an accommodation party and a person entitled to enforce theinstrument impairs the value of the interest in collateral, the obligation ofany party who is jointly and severally liable with respect to the securedobligation is discharged to the extent the impairment causes the partyasserting discharge to pay more than that party would have been obliged topay, taking into account rights of contribution, if impairment had notoccurred. If the party asserting discharge is an accommodation party notentitled to discharge under subsection (e), the party is deemed to have aright to contribution based on joint and several liability rather than aright to reimbursement. The burden of proving impairment is on the partyasserting discharge.
(g) Under subsection (e) or (f), impairing value of an interest in collateralincludes (i) failure to obtain or maintain perfection or recordation of theinterest in collateral, (ii) release of collateral without substitution ofcollateral of equal value, (iii) failure to perform a duty to preserve thevalue of collateral owed, under Title 8.9A or other law, to a debtor orsurety or other person secondarily liable, or (iv) failure to comply withapplicable law in disposing of collateral.
(h) An accommodation party is not discharged under subsection (c), (d), or(e) unless the person entitled to enforce the instrument knows of theaccommodation or has notice under § 8.3A-419 (c) that the instrument wassigned for accommodation.
(i) A party is not discharged under this section if (i) the party assertingdischarge consents to the event or conduct that is the basis of thedischarge, or (ii) the instrument or a separate agreement of the partyprovides for waiver of discharge under this section either specifically or bygeneral language indicating that parties waive defenses based on suretyshipor impairment of collateral.
(Code 1950, § 6-473; 1964, c. 219, § 8.3-606; 1992, c. 693.)
