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TeachMeFinance.com historic definition... Accommodation party -- One who signs a negotiable instrument as maker, drawer, acceptor or indorser without receiving value therefor and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value (for a consideration paid in money or otherwise), notwithstanding that such holder knew him to be only an accommodation party. An accommodation indorser may place his name on the Paper with an understanding that it is a mere formality and that he is not to be called upon for payment in any event; in another case there may be an understanding that the paper is to be used for some particular purpose and for no other. In the first case the accommodation indorser is not liable to the first holder in any event; in the second case he is not liable to the first holder if the paper is with the knowledge of that holder diverted from the purpose for which it was issued. But in either case he is liable to any subsequent holder who lias taken the paper in good faith and with no knowledge of the restriction or limitation. The instrument cannot be enforced by any person who takes it in violation of such terms and conditions when notice thereof has been given. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2007 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.