Accommodation Endorsement
Barron's Accounting Dictionary:
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Accommodation Endorsement
Written agreement to be liable made without consideration on a credit instrument (e.g., notes payable) to which another person or firm is a party, thus adding strength to the credit application. An example: a parent company endorses a note of a subsidiary payable to a bank or other lender.
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Accommodation Endorsement
West's Encyclopedia of American Law:
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Accommodation Endorsement
This entry contains information applicable to United States law only.
The act of a third person — the accommodation party — in writing his or her name on the back of a commercial paper without any consideration, but merely to benefit the person to whom the paper is payable or to enable the person who made the document — the maker— to obtain money or credit on it.
An accommodation endorsement is a loan of the endorser's credit up to the face amount of the paper.
Investopedia Financial Dictionary:
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Accommodation Endorsement
A written agreement from one entity to back the credit liability of another. This insurance is made without consideration, and adds strength to the creditworthiness of the insured entity. This would usually be made by a parent company to a subsidiary, and allows the subsidiary to take on the parent's credit standing. An accommodation endorsement is similar to a government guaranteeing a third party's debt with its full faith and credit.
Investopedia Says:
This concept is used in everyday life as well. For example, someone who is young and has no credit established to qualify for a credit card or loan, may be able to qualify if a parent or guardian co-signs. This process is similar to accommodation endorsement.
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Copyrights:
Barron's Accounting Dictionary
Dictionary of Accounting Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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West's Encyclopedia of American Law
West's Encyclopedia of American Law. Copyright © 1998 by The Gale Group, Inc. All rights reserved.
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