Asked by Nicole Guerrero on Jun 10, 2024
Verified
Franz signs a $1,000 note payable to ABC Bank. To help Franz get the loan approved, Amy also signs the note as an accommodation maker. Amy:
A) has the same liability as that of an accommodation indorser on a check.
B) has $500 of liability to the bank and Franz has $500 of liability.
C) has secondary liability on the note.
D) and Franz both have primary liability on the note.
Accommodation Maker
A person who signs a loan agreement as a guarantor without receiving any benefits from the loan.
Primary Liability
The obligation to be the first or main party responsible for payment or performance under a legal instrument, such as a loan or contract.
Accommodation Indorser
A person who signs a negotiable instrument on behalf of another without receiving a direct benefit, aiming to provide additional confidence to the payee.
- Grasp the responsibilities and liabilities of accommodation parties.
Verified Answer
RB
ravel bembridgeJun 16, 2024
Final Answer :
D
Explanation :
Amy, as an accommodation maker, and Franz both have primary liability on the note. This means they are equally and fully responsible for the repayment of the debt to ABC Bank.
Learning Objectives
- Grasp the responsibilities and liabilities of accommodation parties.