Mutual Accommodation

A situation in which bill of exchange is drawn for accommodation of both drawer and drawee is called mutual accommodation.

Generally a bill of exchange is drawn by a soul on his debtor to settle a trade debt. A soul could be a person who has sold  merchandise on credit basis and a debtor could be a one who has purchased merchandise on credit basis. Thus, a bill that is drawn by a soul and accepted by a debtor is thought as a bill of exchange.

On the other hand, a bill of exchange that is drawn to oblige a follower or to give him a short lived help or to supply him a loan or to accommodate one or more parties, is termed an "accommodation bill of exchange".

Such a bill is drawn and accepted with none sale and get of products. because the bill is drawn to satisfy the temporary need of cash therefore there's no question of retentive this bill by the drawer till the maturity. The bill are discounted and cash are received straightaway. The drawer before maturity date is needed to supply the acceptor with funds so he may need his acceptance on the maturity.