§ 25-9-408. Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain general intangibles ineffective.
§25‑9‑408. Restrictions on assignment of promissory notes, health‑care‑insurancereceivables, and certain general intangibles ineffective.
(a) Term restrictingassignment generally ineffective. Except as otherwise provided in subsection(b) of this section, a term in a promissory note or in an agreement between anaccount debtor and a debtor which relates to a health‑care‑insurancereceivable or a general intangible, including a contract, permit, license, orfranchise, and which term prohibits, restricts, or requires the consent of theperson obligated on the promissory note or the account debtor to, theassignment or transfer of, or creation, attachment, or perfection of a securityinterest in, the promissory note, health‑care‑insurance receivable,or general intangible, is ineffective to the extent that the term:
(1) Would impair thecreation, attachment, or perfection of a security interest; or
(2) Provides that theassignment or transfer or the creation, attachment, or perfection of thesecurity interest may give rise to a default, breach, right of recoupment,claim, defense, termination, right of termination, or remedy under thepromissory note, health‑care‑insurance receivable, or generalintangible.
(b) Applicability ofsubsection (a) to sales of certain rights to payment. Subsection (a) of thissection applies to a security interest in a payment intangible or promissorynote only if the security interest arises out of a sale of the paymentintangible or promissory note.
(c) Legal restrictionson assignment generally ineffective. A rule of law, statute, or regulationthat prohibits, restricts, or requires the consent of a government,governmental body or official, person obligated on a promissory note, oraccount debtor to the assignment or transfer of, or creation of a securityinterest in, a promissory note, health‑care‑insurance receivable,or general intangible, including a contract, permit, license, or franchisebetween an account debtor and a debtor, is ineffective to the extent that therule of law, statute, or regulation:
(1) Would impair thecreation, attachment, or perfection of a security interest; or
(2) Provides that theassignment or transfer or the creation, attachment, or perfection of thesecurity interest may give rise to a default, breach, right of recoupment,claim, defense, termination, right of termination, or remedy under thepromissory note, health‑care‑insurance receivable, or generalintangible.
(d) Limitation onineffectiveness under subsections (a) and (c). To the extent that a term in apromissory note or in an agreement between an account debtor and a debtor whichrelates to a health‑care‑insurance receivable or general intangibleor a rule of law, statute, or regulation described in subsection (c) of thissection would be effective under law other than this Article but is ineffectiveunder subsection (a) or (c) of this section, the creation, attachment, orperfection of a security interest in the promissory note, health‑care‑insurancereceivable, or general intangible:
(1) Is not enforceableagainst the person obligated on the promissory note or the account debtor;
(2) Does not impose aduty or obligation on the person obligated on the promissory note or theaccount debtor;
(3) Does not require theperson obligated on the promissory note or the account debtor to recognize thesecurity interest, pay or render performance to the secured party, or acceptpayment or performance from the secured party;
(4) Does not entitle thesecured party to use or assign the debtor's rights under the promissory note,health‑care‑insurance receivable, or general intangible, includingany related information or materials furnished to the debtor in the transactiongiving rise to the promissory note, health‑care‑insurancereceivable, or general intangible;
(5) Does not entitle thesecured party to use, assign, possess, or have access to any trade secrets orconfidential information of the person obligated on the promissory note or theaccount debtor; and
(6) Does not entitle thesecured party to enforce the security interest in the promissory note, health‑care‑insurancereceivable, or general intangible.
(e) Section prevailsover inconsistent law. Except to the extent otherwise provided in subsection(f) of this section, this section prevails over any inconsistent provision ofan existing or future statute, rule, or regulation of this State unless theprovision is contained in a statute of this State, refers expressly to thissection, and states that the provision prevails over this section.
(f) Inapplicability. Subsection (c) of this section does not apply to an assignment or transfer of,or the creation, attachment, perfection, or enforcement of a security interestin, a right the transfer of which is prohibited or restricted by any of the followingstatutes to the extent that the statute is inconsistent with subsection (c) ofthis section: North Carolina Structured Settlement Act (Article 44B of Chapter1 of the General Statutes); North Carolina Crime Victims Compensation Act(Chapter 15B of the General Statutes); North Carolina Consumer Finance Act(Article 15 of Chapter 53 of the General Statutes); North Carolina Firemen'sand Rescue Squad Workers' Pension Fund (Article 86 of Chapter 58 of the GeneralStatutes); Employment Security Law (Chapter 96 of the General Statutes); NorthCarolina Workers' Compensation Act (Article 1 of Chapter 97 of the GeneralStatutes); and Programs of Public Assistance (Article 2 of Chapter 108A of theGeneral Statutes). (2000‑169, s. 1.)