Accommodation Endorsement Law and Legal Definition

Accommodation endorsement is a note or written agreement endorsed by one person to back the credit liability of another so that bank will lend money to another person with a poor or inadequate credit history. This is usually be made by a parent company to a subsidiary thereby allowing the subsidiary to take on the parent's credit standing. An accommodation endorsement is equivalent to a government guaranteeing a third party's debt with its full faith and credit. An accommodation endorsement of a partnership made by one partner, but which is not within the scope of the firm business, will not bind the firm and other partners, unless such endorsement was in fact specially authorized or assented to, or is subsequently ratified. Likewise, a mere accommodation note or accommodation endorsement by a married woman, is not sufficient to create a charge upon her separate estate.