Alaska Statutes: AS 45.03.605. Discharge of Endorsers and Accommodation Parties.

Alaska Statutes. Title 45. Trade and Commerce Chapter 3. Negotiable Instruments Section 605. Discharge of Endorsers and Accommodation Parties.

previous: Section 604. Discharge By Cancellation or Renunciation.
next: Section 606. - 45.03.805l Impairment of Recourse or Collateral; Advice of International Sight Draft; Miscellaneous Provisions. [Repealed, Sec. 127 Ch 35 SLA 1993].

AS 45.03.605. Discharge of Endorsers and Accommodation Parties.

(a) Discharge, under AS 45.03.604 , of the obligation of a party to pay an instrument does not discharge the obligation of an endorser or accommodation party having a right of recourse against the discharged party.
(b) If a person entitled to enforce an instrument agrees, with or without consideration, to an extension of the due date of the obligation of a party to pay the instrument, the extension discharges an endorser or accommodation party having a right of recourse against the party whose obligation is extended to the extent the endorser or accommodation party proves that the extension caused loss to the endorser or accommodation party with respect to the right of recourse.
(c) If a person entitled to enforce an instrument agrees, with or without consideration, to a material modification of the obligation of a party other than an extension of the due date, the modification discharges the obligation of an endorser or accommodation party having a right of recourse against the person whose obligation is modified to the extent the modification causes loss to the endorser or accommodation party with respect to the right of recourse. The loss suffered by the endorser or accommodation party as a result of the modification is equal to the amount of the right of recourse unless the person enforcing the instrument proves that no loss was caused by the modification or that the loss caused by the modification was an amount less than the amount of the right of recourse.
(d) If the obligation of a party to pay an instrument is secured by an interest in collateral and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of an endorser or accommodation party having a right of recourse against the obligor is discharged to the extent of the impairment. The value of an interest in collateral is impaired to the extent the value of the interest is reduced to an amount less than the amount of the right of recourse of the party asserting discharge, or to the extent the reduction in value of the interest causes an increase in the amount by which the amount of the right of recourse exceeds the value of the interest. The burden of proving impairment is on the party asserting discharge.
(e) If the obligation of a party is secured by an interest in collateral not provided by an accommodation party and a person entitled to enforce the instrument impairs the value of the interest in collateral, the obligation of a party who is jointly and severally liable with respect to the secured obligation is discharged to the extent the impairment causes the party asserting discharge to pay more than that party would have been obliged to pay, taking into account rights of contribution, if impairment had not occurred. If the party asserting discharge is an accommodation party not entitled to discharge under (d) of this section, the party is considered to have a right to contribution based on joint and several liability rather than a right to reimbursement. The burden of proving impairment is on the party asserting discharge.
(f) Under (d) or (e) of this section, impairing value of an interest in collateral includes

(1) failure to obtain or maintain perfection or recordation of the interest in collateral;

(2) release of collateral without substitution of collateral of equal value;

(3) failure to perform a duty to preserve the value of collateral owed, under AS 45.29 or other law, to a debtor or surety or other person secondarily liable; or

(4) failure to comply with applicable law in disposing of collateral.
(g) An accommodation party is not discharged under (b), (c), or (d) of this section unless the person entitled to enforce the instrument knows of the accommodation or has notice under AS 45.03.419 (c) that the instrument was signed for accommodation.
(h) A party is not discharged under this section if

(1) the party asserting discharge consents to the event or conduct that is the basis of the discharge; or

(2) the instrument or a separate agreement of the party provides for waiver of discharge under this section either specifically or by general language indicating that parties waive defenses based on suretyship or impairment of collateral.
(i) In this section, the term "endorser" includes a drawer having the obligation described in AS 45.03.414 (d).

This version of the Alaska Statutes is current through December, 2007. The Alaska Statutes were automatically converted to HTML from a plain text format. Every effort has been made to ensure their accuracy, but this can not be guaranteed. If it is critical that the precise terms of the Alaska Statutes be known, it is recommended that more formal sources be consulted. For statutes adopted after the effective date of these statutes, see, Alaska State Legislature If any errors are found, please e-mail Touch N' Go systems at E-mail. We hope you find this information useful.