400.9-404. Rights acquired by assignee--claims and defenses against assignee.
Rights acquired by assignee--claims and defenses against assignee.
400.9-404. (a) Unless an account debtor has made an enforceableagreement not to assert defenses or claims, and subject to subsections (b)through (e), the rights of an assignee are subject to:
(1) All terms of the agreement between the account debtor and assignorand any defense or claim in recoupment arising from the transaction that gaverise to the contract; and
(2) Any other defense or claim of the account debtor against theassignor which accrues before the account debtor receives a notification ofthe assignment authenticated by the assignor or the assignee.
(b) Subject to subsection (c) and except as otherwise provided insubsection (d), the claim of an account debtor against an assignor may beasserted against an assignee under subsection (a) only to reduce the amountthe account debtor owes.
(c) This section is subject to law other than this article whichestablishes a different rule for an account debtor who is an individual andwho incurred the obligation primarily for personal, family, or householdpurposes.
(d) In a consumer transaction, if a record evidences the accountdebtor's obligation, law other than this article requires that the recordinclude a statement to the effect that the account debtor's recovery againstan assignee with respect to claims and defenses against the assignor may notexceed amounts paid by the account debtor under the record, and the recorddoes not include such a statement, the extent to which a claim of an accountdebtor against the assignor may be asserted against an assignee is determinedas if the record included such a statement.
(e) This section does not apply to an assignment of ahealth-care-insurance receivable.
(L. 1963 p. 503 § 9-404, A.L. 1965 p. 595, A.L. 1978 S.B. 755, A.L. 1988 S.B. 583, A.L. 2001 S.B. 288)Effective 7-01-01