70A-9a-406 - Discharge of account debtor -- Notification of assignment -- Identification and proof of assignment -- Restrictions on assignment of accounts, chattel paper, payment intangibles, and prom
70A-9a-406. Discharge of account debtor -- Notification of assignment --Identification and proof of assignment -- Restrictions on assignment of accounts, chattelpaper, payment intangibles, and promissory notes ineffective.
(1) Subject to Subsections (2) through (9), an account debtor on an account, chattel paper,or a payment intangible may discharge its obligation by paying the assignor until, but not after,the account debtor receives a notification, authenticated by the assignor or the assignee, that theamount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying theassignee and may not discharge the obligation by paying the assignor.
(2) Subject to Subsection (8), notification is ineffective under Subsection (1):
(a) if it does not reasonably identify the rights assigned;
(b) to the extent that an agreement between an account debtor and a seller of a paymentintangible limits the account debtor's duty to pay a person other than the seller and the limitation iseffective under law other than this chapter; or
(c) at the option of an account debtor, if the notification notifies the account debtor tomake less than the full amount of any installment or other periodic payment to the assignee, evenif:
(i) only a portion of the account, chattel paper, or payment intangible has been assignedto that assignee;
(ii) a portion has been assigned to another assignee; or
(iii) the account debtor knows that the assignment to that assignee is limited.
(3) Subject to Subsection (8), if requested by the account debtor, an assignee shallseasonably furnish reasonable proof that the assignment has been made. Unless the assigneecomplies, the account debtor may discharge its obligation by paying the assignor, even if theaccount debtor has received a notification under Subsection (1).
(4) Except as otherwise provided in Subsection (5) and Sections 70A-2a-303 and70A-9a-407, and subject to Subsection (8), a term in an agreement between an account debtor andan assignor or in a promissory note is ineffective to the extent that it:
(a) prohibits, restricts, or requires the consent of the account debtor or person obligatedon the promissory note to the assignment or transfer of, or the creation, attachment, perfection, orenforcement of a security interest in, the account, chattel paper, payment intangible, orpromissory note; or
(b) provides that the assignment or transfer or the creation, attachment, perfection, orenforcement of the security interest may give rise to a default, breach, right of recoupment, claim,defense, termination, right of termination, or remedy under the account, chattel paper, paymentintangible, or promissory note.
(5) Subsection (4) does not apply to the sale of a payment intangible or promissory note.
(6) Except as otherwise provided in Sections 70A-2a-303 and 70A-9a-407 and subject toSubsections (8) and (9), a rule of law, statute, or regulation that prohibits, restricts, or requires theconsent of a government, governmental body or official, or account debtor to the assignment ortransfer of, or creation of a security interest in, an account or chattel paper is ineffective to theextent that the rule of law, statute, or regulation:
(a) prohibits, restricts, or requires the consent of the government, governmental body orofficial, or account debtor to the assignment or transfer of, or the creation, attachment, perfection,or enforcement of a security interest in the account or chattel paper; or
(b) provides that the assignment or transfer or the creation, attachment, perfection, orenforcement of the security interest may give rise to a default, breach, right of recoupment, claim,defense, termination, right of termination, or remedy under the account or chattel paper.
(7) Subject to Subsection (8), an account debtor may not waive or vary its option underSubsection (2)(c).
(8) This section is subject to law other than this chapter which establishes a different rulefor an account debtor who is an individual and who incurred the obligation primarily for personal,family, or household purposes.
(9) This section does not apply to an assignment of a health-care-insurance receivable.
Enacted by Chapter 252, 2000 General Session