                                 CODE OF VIRGINIA

INSTRUMENTS SIGNED FOR ACCOMMODATION (§ 8.3A-419)

a. If an instrument is issued for value given for the benefit of a party to the
instrument (&#8220;accommodated party&#8221;) and another party to the
instrument (&#8220;accommodation party&#8221;) signs the instrument for the
purpose of incurring liability on the instrument without being a direct
beneficiary of the value given for the instrument, the instrument is signed by
the accommodation party &#8220;for accommodation.&#8221;

b. An accommodation party may sign the instrument as maker, drawer, acceptor, or
endorser and, subject to subsection (d), is obliged to pay the instrument in the
capacity in which the accommodation party signs. The obligation of an
accommodation party may be enforced notwithstanding any statute of frauds and
whether or not the accommodation party receives consideration for the
accommodation.

c. A person signing an instrument is presumed to be an accommodation party and
there is notice that the instrument is signed for accommodation if the signature
is an anomalous endorsement or is accompanied by words indicating that the
signer is acting as surety or guarantor with respect to the obligation of
another party to the instrument. Except as provided in &#xA7; 8.3A-605, the
obligation of an accommodation party to pay the instrument is not affected by
the fact that the person enforcing the obligation had notice when the instrument
was taken by that person that the accommodation party signed the instrument for
accommodation.

d. If the signature of a party to an instrument is accompanied by words
indicating unambiguously that the party is guaranteeing collection rather than
payment of the obligation of another party to the instrument, the signer is
obliged to pay the amount due on the instrument to a person entitled to enforce
the instrument only if (i) execution of judgment against the other party has
been returned unsatisfied, (ii) the other party is insolvent or in an insolvency
proceeding, (iii) the other party cannot be served with process, or (iv) it is
otherwise apparent that payment cannot be obtained from the other party.

e. An accommodation party who pays the instrument is entitled to reimbursement
from the accommodated party and is entitled to enforce the instrument against
the accommodated party. An accommodated party who pays the instrument has no
right of recourse against, and is not entitled to contribution from, an
accommodation party.

HISTORY: Code 1950, §§ 6-381, 6-416; 1964, c. 219, §§ 8.3-415, 8.3-416;
1992, c. 693.