Ohio § 1303.70

§ 1303.70.

(A) If a person entitled to enforce an instrument releases the obligation of a principal

obligor in whole or in part, and another party to the instrument is a secondary obligor

with respect to the obligation of that principal obligor, the following rules apply: (1) Any obligations of the principal obligor to the secondary obligor with respect to

any previous payment by the secondary obligor are not affected.  Unless the terms of the release preserve the secondary obligor's recourse, the principal

obligor is discharged, to the extent of the release, from any other duties to the

secondary obligor under this chapter. (2) Unless the terms of the release provide that the person entitled to enforce the instrument

retains the right to enforce the instrument against the secondary obligor, the secondary

obligor is discharged to the same extent as the principal obligor from any unperformed

portion of its obligation on the instrument.  If the instrument is a check and the obligation of the secondary obligor is based

on an indorsement of the check, the secondary obligor is discharged without regard

to the language or circumstances of the discharge or other release. (3) If the secondary obligor is not discharged under division (A)(2) of this section,

the secondary obligor is discharged to the extent of the value of the consideration

for the release, and to the extent that the release would otherwise cause the secondary

obligor a loss. (B) If a person entitled to enforce an instrument grants a principal obligor an extension

of the time at which one or more payments are due on the instrument and another party

to the instrument is a secondary obligor with respect to the obligation of that principal

obligor, the following rules apply: (1) Any obligations of the principal obligor to the secondary obligor with respect to

any previous payment by the secondary obligor are not affected.  Unless the terms of the extension preserve the secondary obligor's recourse, the

extension correspondingly extends the time for performance of any other duties owed

to the secondary obligor by the principal obligor under this chapter. (2) The secondary obligor is discharged to the extent that the extension would otherwise

cause the secondary obligor a loss. (3) To the extent that the secondary obligor is not discharged under division (B)(2)

of this section, the secondary obligor may perform its obligations to a person entitled

to enforce the instrument as if the time for payment had not been extended or, unless

the terms of the extension provide that the person entitled to enforce the instrument

retains the right to enforce the instrument against the secondary obligor as if the

time for payment had not been extended, treat the time for performance of its obligations

as having been extended correspondingly. (C) If a person entitled to enforce an instrument agrees, with or without consideration,

to a modification of the obligation of a principal obligor other than a complete or

partial release or an extension of the due date and another party to the instrument

is a secondary obligor with respect to the obligation of that principal obligor, the

following rules apply: (1) Any obligations of the principal obligor to the secondary obligor with respect to

any previous payment by the secondary obligor are not affected.  The modification correspondingly modifies any other duties owed to the secondary

obligor by the principal obligor under this chapter. (2) The secondary obligor is discharged from any unperformed portion of its obligation

to the extent that the modification would otherwise cause the secondary obligor a

loss. (3) To the extent that the secondary obligor is not discharged under division (C)(2)

of this section, the secondary obligor may satisfy its obligation on the instrument

as if the modification had not occurred, or treat its obligation on the instrument

as having been modified correspondingly. (D) If the obligation of a principal obligor is secured by an interest in collateral,

another party to the instrument is a secondary obligor with respect to that obligation,

and a person entitled to enforce the instrument impairs the value of the interest

in collateral, the obligation of the secondary 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 recourse of the secondary

obligor, or the reduction in value of the interest causes an increase in the amount

by which the amount of the recourse exceeds the value of the interest.  For purposes of this division, impairing the value of an interest in collateral

includes any of the following: (1) The failure to obtain or maintain perfection or recordation of the interest in collateral; (2) The release of collateral without substitution of collateral of equal value or equivalent

reduction of the underlying obligation; (3) The failure to perform a duty to preserve the value of collateral owed, under Chapter

1309. of the Revised Code or other law, to a debtor or other person secondarily liable; (4) The failure to comply with applicable law in disposing of or otherwise enforcing

the interest in collateral. (E) A secondary obligor is not discharged under division (A)(3), (B), (C), or (D) of

this section unless the person entitled to enforce the instrument knows that the person

is a secondary obligor or has notice under division (C) of section 1303.59 of the Revised Code that the instrument was signed for accommodation. (F) A secondary obligor is not discharged under this section if the secondary obligor

consents to the event or conduct that is the basis of the discharge, or the instrument

or a separate agreement of the party provides for a waiver of discharge under this

section specifically or by general language indicating that parties waive defenses

based on suretyship or impairment of collateral.  Unless the circumstances indicate otherwise, consent by the principal obligor to

an act that would lead to a discharge under this section constitutes consent to that

act by the secondary obligor if the secondary obligor controls the principal obligor

or deals with the person entitled to enforce the instrument on behalf of the principal

obligor. (G) A release or extension preserves a secondary obligor's recourse if the terms of the

release or extension provide both of the following: (1) The person entitled to enforce the instrument retains the right to enforce the instrument

against the secondary obligor. (2) The recourse of the secondary obligor continues as if the release or extension had

not been granted. (H) Except as otherwise provided in division (I) of this section, a secondary obligor

asserting a discharge under this section has the burden of persuasion both with respect

to the occurrence of the acts alleged to harm the secondary obligor and loss or prejudice

caused by those acts. (I) If the secondary obligor demonstrates prejudice caused by an impairment of its recourse,

and the circumstances of the case indicate that the amount of loss is not reasonably

susceptible of calculation or requires proof of facts that are not ascertainable,

it is presumed that the act impairing recourse caused a loss or impairment equal to

the liability of the secondary obligor on the instrument.  In that event, the burden of persuasion as to any lesser amount of the loss is on

the person entitled to enforce the instrument.