Accommodation Endorsement

Summary of Accommodation Endorsement

The endorsement of a bill of exchange or other negotiable instrument by a bank or other credit worthy party for purposes of enhancing the acceptability of the instrument in the money market. Generally, the accommodation endorser is not a direct party to the transaction which gave rise to the creation of the instrument. By acting as endorser, however, the accommodation party assumes responsibility for redeeming the instrument upon maturity if the drawee or prior endorsers default. Accommodation endorsements are often provided by established firms for affiliated companies, or by banks for valued clients. Endorsement is considered here.

(Main Author: William J. Miller)