810 ILCS 5/3-605
2021 Illinois Compiled Statutes|Chapter 810 - COMMERCIAL CODE|810 ILCS 5/ - Uniform Commercial Code.|Article 3 - Negotiable Instruments

 (from Ch. 26, par. 3-605)Sec. 3-605.     Discharge of indorsers and accommodation parties.(a) In this Section, the term "indorser" includes a drawer having the  obligation described in Section 3-414(d).(b) Discharge, under Section 3-604, 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) 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) 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) 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 (i) 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 (ii) 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) 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) Under subsection (e) or (f), impairing value of an interest in  collateral includes (i) failure to obtain or maintain perfection or  recordation of the interest in collateral, (ii) release of collateral  without substitution of collateral of equal value, (iii) 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 (iv)  failure to comply with applicable law in disposing of collateral.(h) 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 3-419(c) that the instrument was  signed for accommodation.(i) A party is not discharged under this Section if (i) the party  asserting discharge consents to the event or conduct that is the basis of  the discharge, or (ii) the instrument or a separate agreement of the party  provides for waiver or discharge under this Section either specifically or  by general language indicating that parties waive defenses based on  suretyship or impairment of collateral.    (Source: P.A. 87-582; 87-1135.)