Also known as: rights of recourse · recourse right
Written by attorneys · grounded in primary & secondary sources — see below
A right held by a secondary obligor to recover amounts paid on a secured obligation from the primary debtor, another obligor, or their property.
Rowan Russell signed a support agreement promising direct payment to Regal Apparel if Redline Automotive missed milestone receivables. After Redline defaulted and Rowan paid Regal in full, Rowan asserted rights to Redline's equipment and accounts. The agreement's explicit reimbursement clause allowed Rowan to recover the full amount paid from Redline's assets.
Rosalind Reed signed a note as accommodation party for Riverside Healthcare's loan from a bank. When the bank impaired collateral by releasing part of the security without notice, Rosalind paid the remaining balance. She then pursued recovery directly from Riverside's remaining assets under her right of recourse.
Select any source to read its text and confirm it supports the definition.
An obligor qualifies as secondary when the agreement grants an express right to recover payments from the primary debtor or its property. This feature shows the obligation is contingent backup support rather than an independent primary duty. Courts examine the substance of the transaction, including any reimbursement language, to confirm the secondary character.
Supporting sources
Impairment of collateral discharges the secondary obligor to the extent the right of recourse is reduced below the value of the remaining interest. The party asserting discharge bears the burden of proving the impairment amount. This protection applies only to parties with a right of recourse, such as indorsers or accommodation parties.
Supporting sources
A release of the primary debtor does not discharge a secondary obligor who retains a right of recourse against the primary party or its property. The secondary obligor may still enforce reimbursement after paying the creditor. This rule allows creditors to settle with the primary debtor without losing rights against sureties.
Supporting sources
A right of recourse allows full reimbursement from the primary obligor, while contribution typically requires only proportional sharing among co-sureties. Anomalous indorsers receive contribution under UCC 3-116 unless an agreement creates sub-surety rights that convert the claim to full recourse. The distinction turns on whether the parties structured the arrangement as primary versus secondary liability.
Supporting sources