2012 Pennsylvania Consolidated Statutes
Title 13 - COMMERCIAL CODE
Chapter 36 - Discharge and Payment
Section 3605 - Discharge of indorsers and accommodation parties

     § 3605.  Discharge of indorsers and accommodation parties.
        (a)  Definition.--As used in this section, the term
     "indorser" includes a drawer having the obligation described in
     section 3414(d) (relating to obligation of drawer).
        (b)  Effect of discharge in certain situation.--Discharge,
     under section 3604 (relating to discharge by cancellation or
     renunciation), of the obligation of a party to pay an instrument
     does not discharge the obligation of an indorser or
     accommodation party having a right of recourse against the
     discharged party.
        (c)  Agreement to extension of due date.--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
     indorser or accommodation party having a right of recourse
     against the party whose obligation is extended to the extent the
     indorser or accommodation party proves that the extension caused
     loss to the indorser or accommodation party with respect to the
     right of recourse.
        (d)  Agreement to material modification.--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 indorser or accommodation party
     having a right of recourse against the person whose obligation
     is modified to the extent the modification causes loss to the
     indorser or accommodation party with respect to the right of
     recourse. The loss suffered by the indorser 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.
        (e)  Impairment of collateral; discharge of indorser or
     accommodation party.--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 indorser 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 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.
        (f)  Impairment of collateral; discharge of party jointly and
     severally liable.--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 any 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
     subsection (e), the party is deemed 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.
        (g)  Impairing value of an interest in collateral.--Under
     subsection (e) or (f), 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 Division 9 (relating to secured
        transactions) 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.
        (h)  Accommodation party not discharged in certain
     circumstances.--An accommodation party is not discharged under
     subsection (c), (d) or (e) unless the person entitled to enforce
     the instrument knows of the accommodation or has notice under
     section 3419(c) (relating to instruments signed for
     accommodation) that the instrument was signed for accommodation.
        (i)  Other limitations on discharge.--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.

        Cross References.  Section 3605 is referred to in section
     3419 of this title.