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Can you summarize IACO 554.3605?
UNIFORM COMMERCIAL CODE > Discharge of endorsers and accommodation parties.
Short Summary
This section of the Iowa Code, specifically under the Uniform Commercial Code, governs the discharge of endorsers and accommodation parties in relation to payment obligations on an instrument. It clarifies that the discharge of a party’s obligation to pay an instrument does not discharge the obligation of an endorser or accommodation party with a right of recourse against the discharged party. The section also outlines the circumstances under which an extension of the due date or a material modification of the obligation can discharge the obligation of an endorser or accommodation party, provided that loss is proven. Additionally, it addresses the discharge of an endorser or accommodation party when the value of collateral is impaired or when impairment causes a party to pay more than they would have otherwise been obliged to pay. The burden of proving impairment is on the party asserting discharge. The section also specifies the actions that constitute impairing the value of collateral. It further states that an accommodation party is not discharged unless the person entitled to enforce the instrument is aware of the accommodation or has notice of it. Finally, it notes that a party is not discharged if they consent to the event or conduct that forms the basis of the discharge or if the instrument or a separate agreement waives discharge defenses based on suretyship or impairment of collateral.
Whom does it apply to?
Parties involved in the endorsement or accommodation of an instrument
What does it govern?
Discharge of endorsers and accommodation parties
What are exemptions?
No exemptions are mentioned.
What are the Penalties?
No penalties are mentioned.
Jurisdiction
Iowa