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Suggest You - Liability Of Guarantors Or Accommodation Parties When The Original Obligation Is Materially Altered
Well, you've set up your medical billing company and you're all set to do business. Except there's one problem. You don't have any clients. So the question is, how do you go about getting them? Since nobody knows you even exist yet, they're not likely to come knocking on your door. Well, hopefully, after you've read this article, you'll have several good ideas for how to build up your medical billing client base.Typically, what this is all going to come down to is advertising, obviously. But how? Years ago, you didn't have nearly the number of advertising methods that you have today. The Internet has opened up a new world to busine
The Keesling illustration. The plaintiff basically tried to characterize the second note as a refinance of the original note. Not so fast, said the Court. The second note purported to add accounts payable of other parties, and it capitalized interest due on the original note. “In itself, this capitalizati
Let's assume you want to let everyone know that you will be having a "RED TAG" promotion. You can do it the wrong way by assembling the troops and announcing the date. You can even make the mistake easier, just send out a memo or office e-mail and tell everyone.Or you can do it the effective way.THINK ABOUT WHAT YOU WANT TO ACCOMPLISH, INVOLVE THE PEOPLE YOU NEED TO INVOLVE AND PREPARE.We will use your red tag event to illustrate.You’ve made the decision to have a sale. Congratulations.Have you bothered to see if you have enough red tags? Have you scheduled when to place the tags on the merch
Background. In Keesling, an Indiana commercial foreclosure case, there were multiple parties to an installment note and mortgage related to the development of a residential neighborhood. Three entities and four individuals in their personal capacities signed the original note of $300,000. (There were no guaranties.) When the note came due, there was approximately $50,000 left to be paid. Some, but not all, of the original parties entered into a second note that took into consideration the balance remaining of the original note and about another $50,000. The parties to the second note ultimately defaulted, and the plaintiff assignee, who held the note and mortgage, sued everyone, including the original signatories. The defendants relevant to this article did not know about or consent to the execution of the second note. They contended that they merely were accommodation parties on the original note and that, because the second note constituted a material alteration of the original obligation, they should be discharged from further personal liability under either note. The Court agreed.
Guarantor vs. accommodation party. The Indiana Court of Appeals labeled the individuals who signed the original note in their personal capacity as “accommodation parties” pursuant to the definition in Indiana’s UCC, Article 3.1: I.C. 26-1-3.1-419. An accommodation party, according to the Indiana UCC, is someone who signs an instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument. Id. at 7. As a practical matter, particularly for purposes of enforcement, an accommodation party essentially is the same as a guarantor, the primary difference being that a guarantor signs a separate instrument – a guaranty. (Also, accommodation parties, sometimes called co-makers or co-borrowers, may have available to them common law surety defenses - a topic I’ll tackle another day.) The Court in Keesling concluded that the subject defendants signed the original note but were not direct beneficiaries of the value given for the instrument. So, the Court deemed them to be accommodation parties, although the opinion also referred to them as guarantors and applied general guaranty law.
Material alteration. The Court noted that, generally, a guaranty is a promise to answer for the debt and default of another. When parties cause a material alteration of an underlying obligation, without the consent of the guarantor, the guarantor is discharged from further liability. Indiana defines a material alteration as a “change which alters the legal identity of the principal’s contract, substantially increases the risk of loss to the guarantor, or places the guarantor in a different position.” Keeling at 6-7.
The Keesling illustration. The plaintiff basically tried to characterize the second note as a refinance of the original note. Not so fast, said the Court. The second note purported to add accounts payable of other parties, and it capitalized interest due on the original note. “In itself, this capitalizatio
In order to successfully assert a domain name dispute complaint under the UDRP you have to show that the domain name in dispute is identical or confusingly similar to your trademark, that the respondent does not have a right or legitimate interest in the domain name, and that the respondent registered and used the domain name in bad faith. One of the more common issues relates to pornosquatting. In its simplest form, pornosquatting occurs when your trademark is used as part of a domain name for a website containing pornographic material. Regardless, pornography alone may not be enough to show bad faith.A classic case of "pornosquattin
Guarantor vs. accommodation party. The Indiana Court of Appeals labeled the individuals who signed the original note in their personal capacity as “accommodation parties” pursuant to the definition in Indiana’s UCC, Article 3.1: I.C. 26-1-3.1-419. An accommodation party, according to the Indiana UCC, is someone who signs an instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument. Id. at 7. As a practical matter, particularly for purposes of enforcement, an accommodation party essentially is the same as a guarantor, the primary difference being that a guarantor signs a separate instrument – a guaranty. (Also, accommodation parties, sometimes called co-makers or co-borrowers, may have available to them common law surety defenses - a topic I’ll tackle another day.) The Court in Keesling concluded that the subject defendants signed the original note but were not direct beneficiaries of the value given for the instrument. So, the Court deemed them to be accommodation parties, although the opinion also referred to them as guarantors and applied general guaranty law.
Material alteration. The Court noted that, generally, a guaranty is a promise to answer for the debt and default of another. When parties cause a material alteration of an underlying obligation, without the consent of the guarantor, the guarantor is discharged from further liability. Indiana defines a material alteration as a “change which alters the legal identity of the principal’s contract, substantially increases the risk of loss to the guarantor, or places the guarantor in a different position.” Keeling at 6-7.
The Keesling illustration. The plaintiff basically tried to characterize the second note as a refinance of the original note. Not so fast, said the Court. The second note purported to add accounts payable of other parties, and it capitalized interest due on the original note. “In itself, this capitalizati
Continues from part 1 “planning a holiday; the essentials” Please read that article first.If you are travelling further a field then you may have many more factors to consider, such as inoculations, extra cover, etc. More far flung destinations, such as Africa for example, still have diseases such as malaria that are especially prevalent. It is also recommended that you should be inoculated against other diseases such as; Yellow fever, Typhoid, Hepatitis A, Polio (may already be covered) and others your doctor may recommend. It is important to note; both Typhoid and Hepatitis A can be caught from contaminated food and water. Wherever p
Guarantor vs. accommodation party. The Indiana Court of Appeals labeled the individuals who signed the original note in their personal capacity as “accommodation parties” pursuant to the definition in Indiana’s UCC, Article 3.1: I.C. 26-1-3.1-419. An accommodation party, according to the Indiana UCC, is someone who signs an instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument. Id. at 7. As a practical matter, particularly for purposes of enforcement, an accommodation party essentially is the same as a guarantor, the primary difference being that a guarantor signs a separate instrument – a guaranty. (Also, accommodation parties, sometimes called co-makers or co-borrowers, may have available to them common law surety defenses - a topic I’ll tackle another day.) The Court in Keesling concluded that the subject defendants signed the original note but were not direct beneficiaries of the value given for the instrument. So, the Court deemed them to be accommodation parties, although the opinion also referred to them as guarantors and applied general guaranty law.
Material alteration. The Court noted that, generally, a guaranty is a promise to answer for the debt and default of another. When parties cause a material alteration of an underlying obligation, without the consent of the guarantor, the guarantor is discharged from further liability. Indiana defines a material alteration as a “change which alters the legal identity of the principal’s contract, substantially increases the risk of loss to the guarantor, or places the guarantor in a different position.” Keeling at 6-7.
The Keesling illustration. The plaintiff basically tried to characterize the second note as a refinance of the original note. Not so fast, said the Court. The second note purported to add accounts payable of other parties, and it capitalized interest due on the original note. “In itself, this capitalizati
I’ll always remember Melanie. She wasn’t my first girlfriend. My wife Jill was my first girlfriend, and my second and ...well you get the picture. Melanie wasn’t my 7th grade English teacher either. That unfortunate task went to Mrs. Jonestup, who faithfully tried teaching me grammar, while I stared out the window. Melanie was my server on a recent trip to the California Pizza Kitchen. She smiled the entire time a friend and I were having lunch. Despite the fact that he and I seldom agree on much, on this we reached instant accord: Melanie’s smile truly made us feel welcome.Nothing can start an encounter off on the right foot like a
Material alteration. The Court noted that, generally, a guaranty is a promise to answer for the debt and default of another. When parties cause a material alteration of an underlying obligation, without the consent of the guarantor, the guarantor is discharged from further liability. Indiana defines a material alteration as a “change which alters the legal identity of the principal’s contract, substantially increases the risk of loss to the guarantor, or places the guarantor in a different position.” Keeling at 6-7.
The Keesling illustration. The plaintiff basically tried to characterize the second note as a refinance of the original note. Not so fast, said the Court. The second note purported to add accounts payable of other parties, and it capitalized interest due on the original note. “In itself, this capitalizati
One of the most ancient creatures on our planet is the turtle. They have survived changing environmental conditions for millions of years while many other species have gone extinct. Turtles can be very safe and secure when threatened by retracting their head, tail, and legs into their shell to ride out many dangers of life in the wild. But, if they stayed safe in their shell, they would eventually starve to death and would not be able to create subsequent generations. For turtles to flourish, they have to accept the risk of living and give up the safety of their shell, stick out their necks, and move forward… or perish. It’s the same for bus
The Keesling illustration. The plaintiff basically tried to characterize the second note as a refinance of the original note. Not so fast, said the Court. The second note purported to add accounts payable of other parties, and it capitalized interest due on the original note. “In itself, this capitalization of interest was a material alteration.” Id. at 10-11. So, the second note not only added new debt but increased the total principle draws beyond the original amount of the note. Significantly, the alterations occurred without the knowledge or consent of the parties alleged to be personally liable. The Court held that the alterations were material and that the defendants were “not chargeable with the second note, a new agreement which did not include their signatures.” Id. at 13. The Court also discharged the defendants from any liability as to the original note.
Morals of the story. If as a lender you intend to refinance or modify the original deal, each and every party you want to answer for the debt should sign off on the new loan documents. This is particularly true if you materially alter the original obligation. The lesson is a simple one and, maybe to most of you reading this, an obvious one – get the guarantors to sign another guaranty or get the accommodation parties to sign the second note. Lenders should view the matter as an entirely new transaction.
On the flip side, if you’re a lender who acquired, perhaps through an assignment, a loan that has been modified in some fashion, as was the case in Keesling, you should research and identify all individuals that might be deemed accommodation parties or guarantors. Because your institution may not have originally documented the transaction, obtain all the loan papers and study the deal’s history. If there was not a material alteration of the original debt, missing signatures or guaranties may not be fatal. To maximize your financial recovery, you should consider the possibility of pursuing anyone who signed any of the loan documents prepared throughout the life of the deal.
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