Accommodation Paper Law and Legal Definition

Accommodation Paper is a negotiable instrument and a type of commercial paper, signed by one party as a favor to another party. Person who signs the instrument is the accommodation party and person in whose favor the instrument is signed is the accommodated party. Accommodation party signs the instrument without receiving any consideration in return. The accommodation party acts as surety for accommodated party who remains primarily liable. It has the purpose of enabling the accommodated party to obtain money or credit. Accommodation paper guarantees that the money lent will be repaid by the accommodation party on the date specified in the commercial paper if the accommodated party fails to repay it

Accommodation paper is also termed, ‘Accommodation Bill’, or ‘Accommodation Note’