Accommodation paper

Accommodation paper
An accommodation paper is a document executed by one party for the benefit of another. In practice, an accommodation paper is used as a loan guarantee, in which a third party agrees to repay the loan if the borrower does not.

Accommodation paper guarantees that the money lent will be repaid by the accommodation party on the date specified in the commercial paper if the accommodated party fails to repay it.

Accommodation Paper
A negotiable instrument that provides a third-party promise of payment in the case that the original borrower does not live up to the terms of the original transaction.

accommodation paper
promissory note or negotiable instrumentsigned by a third party, who acts as accommodation maker, endorser, or party.
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English law affords full play to the system of accommodation paper; French law endeavours to stamp it out. A comparison of some of the main points of difference between English and French law will show how the two theories work.

See also: Negotiable instrument, Fraud, Bill of exchange, Bills, Hedge fund