Nevada § 104.3605 - Discharge of endorsers and accommodation parties

§ 104.3605. Discharge of endorsers and accommodation parties

1. In this section, the term “endorser” includes a drawer having the obligation described

in subsection 4 of NRS 104.3414 . 2. Discharge, under NRS 104.3604 , 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. 3. 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 him or her with respect to the right

of recourse. 4. 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. 5. 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 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. 6. 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 he or she 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 5, he or she 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. 7. Under subsection 5 or 6, impairing value of an interest in collateral includes: (a) Failure to obtain or maintain perfection or recordation of the interest in collateral; (b) Release of collateral without substitution of collateral of equal value; (c) Failure to perform a duty to preserve the value of collateral owed under Article

9 or other law to a debtor or surety or other person secondarily liable; or (d) Failure to comply with applicable law in disposing of collateral. 8. An accommodation party is not discharged under subsection 3, 4 or 5 unless the

person entitled to enforce the instrument knows of the accommodation or has notice

under subsection 3 of NRS 104.3419 that the instrument was signed for accommodation. 9. A party is not discharged under this section if: (a) The party asserting discharge consents to the event or conduct that is the basis

of the discharge; or (b) 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.