Accommodation in United Kingdom

Accommodation in the Business Encyclopaedia and Legal Adviser

Based on the Business Encyclopaedia and Legal Adviser , by W.S.M. Knight, Barrister –at – Law.

Suing upon a contract, the plaintiff has, except in the case of contracts under seal, to prove a consideration therefore. Bills of exchange, in proper form, are exceptions to this rule, and once the plaintiff has proved the bill itself, he is entitled to judgment for the amount, therefore; the fact of a consideration having passed being presumed in his favour. Bills drawn, accepted, or endorsed, by persons not receiving con sideration therefore respectively, but for the purpose of lending their names to some other person, are called accommodation bills. For example, when A draws upon B, who accepts the bill merely to oblige A, and to enable him to obtain money, there is created an accommodation acceptance. If the bill is dishonored, and A were to sue B, the latter would have a complete defence. But if, before the bill had matured, A had discounted the bill with C; then upon C suing B, the latter would have no defence. For a bill, whether one of accommodation or not, endorsed to a third party, who takes it bond tide and for value, is good as against the parties to it. As between A and B, it makes no difference that B, who is called the accommodation party, has been paid a commission or reward for the use of his name. Since B is in fact a surety for A, who is called the accommodated party, B, when he has paid the bill, has a right of action against A for indemnity. B can always avail himself of any defence which is available to A; as in a case the party suing owes money to A. It there be an agreement, express or implied, not to negotiate an accommodation bill after maturity, the agreement constitutes an equity attaching to it; subject to which, any third party would take the bill after maturity, even if taken for value, B here incurs no liability. See Bills of Exchange in the English Law.