Franz signs a $1,000 note payable to ABC Bank.To help Franz get the loan approved, Amy also signs the note as an accommodation maker.Amy:
A) has $500 of liability to the bank and Franz has $500 of liability.
B) and Franz both have primary liability on the note.
C) has the same liability as that of an accommodation indorser on a check.
D) has secondary liability on the note.

Question

Quizplus · Accepted Answer

Amy, as an accommodation maker, and Franz both have primary liability to the bank for the full amount of the note. This means both are equally and fully responsible for repaying the $1,000 to ABC Bank.

Franz Signs a $1,000 Note Payable to ABC Bank