8.9A-406 - A-406. Discharge of account debtor; notification of assignment; identification and proof of assignment; restrictions on assignment of accounts, chattel paper, payment intangibles, and promi
§ 8.9A-406. Discharge of account debtor; notification of assignment;identification and proof of assignment; restrictions on assignment ofaccounts, chattel paper, payment intangibles, and promissory notesineffective.
(a) Discharge of account debtor; effect of notification. Subject tosubsections (b) through (i), an account debtor on an account, chattel paper,or a payment intangible may discharge its obligation by paying the assignoruntil, but not after, the account debtor receives a notification,authenticated by the assignor or the assignee, that the amount due or tobecome due has been assigned and that payment is to be made to the assignee.After receipt of the notification, the account debtor may discharge itsobligation by paying the assignee and may not discharge the obligation bypaying the assignor.
(b) When notification ineffective. Subject to subsection (h), notification isineffective under subsection (a):
(1) if it does not reasonably identify the rights assigned;
(2) to the extent that an agreement between an account debtor and a seller ofa payment intangible limits the account debtor's duty to pay a person otherthan the seller and the limitation is effective under law other than thistitle; or
(3) at the option of an account debtor, if the notification notifies theaccount debtor to make less than the full amount of any installment or otherperiodic payment to the assignee, even if:
(A) only a portion of the account, chattel paper, or payment intangible hasbeen assigned to that assignee;
(B) a portion has been assigned to another assignee; or
(C) the account debtor knows that the assignment to that assignee is limited.
(c) Proof of assignment. Subject to subsection (h), if requested by theaccount debtor, an assignee shall seasonably furnish reasonable proof thatthe assignment has been made. Unless the assignee complies, the accountdebtor may discharge its obligation by paying the assignor, even if theaccount debtor has received a notification under subsection (a).
(d) Term restricting assignment generally ineffective. Except as otherwiseprovided in subsection (e) and §§ 8.2A-303 and 8.9A-407, and subject tosubsection (h), a term in an agreement between an account debtor and anassignor or in a promissory note is ineffective to the extent that it:
(1) prohibits, restricts, or requires the consent of the account debtor orperson obligated on the promissory note to the assignment or transfer of, orthe creation, attachment, perfection, or enforcement of a security interestin, the account, chattel paper, payment intangible, or promissory note; or
(2) provides that the assignment or transfer or the creation, attachment,perfection, or enforcement of the security interest may give rise to adefault, breach, right of recoupment, claim, defense, termination, right oftermination, or remedy under the account, chattel paper, payment intangible,or promissory note.
(e) Inapplicability of subsection (d) to certain sales. Subsection (d) doesnot apply to the sale of a payment intangible or promissory note.
(f) Legal restrictions on assignment generally ineffective. Except asotherwise provided in §§ 8.2A-303 and 8.9A-407 and subject to subsections (h)and (i), a rule of law, statute, or regulation that prohibits, restricts, orrequires the consent of a government, governmental body or official, oraccount debtor to the assignment or transfer of, or creation of a securityinterest in, an account or chattel paper is ineffective to the extent thatthe rule of law, statute, or regulation:
(1) prohibits, restricts, or requires the consent of the government,governmental body or official, or account debtor to the assignment ortransfer of, or the creation, attachment, perfection, or enforcement of asecurity interest in the account or chattel paper; or
(2) provides that the assignment or transfer or the creation, attachment,perfection, or enforcement of the security interest may give rise to adefault, breach, right of recoupment, claim, defense, termination, right oftermination, or remedy under the account or chattel paper.
(g) Subsection (b) (3) not waivable. Subject to subsection (h), an accountdebtor may not waive or vary its option under subsection (b) (3).
(h) Rule for individual under other law. This section is subject to law otherthan this title which establishes a different rule for an account debtor whois an individual and who incurred the obligation primarily for personal,family, or household purposes.
(i) Inapplicability to health-care-insurance receivable. This section doesnot apply to an assignment of a health-care-insurance receivable.
(j) Inapplicability of subsection (d) to certain transactions. Subsection (d)does not apply to:
(1) a claim or right to receive compensation for injuries or sickness asdescribed in 26 U.S.C. § 104(a) (1), as amended from time to time; or
(2) a claim or right to receive benefits under a special needs trust asdescribed in 42 U.S.C. § 1396p (d) (4), as amended from time to time.
(k) Inapplicability to partnership and limited liability company interests.This section does not apply to an interest in a partnership or limitedliability company.
(l) No inference regarding structured settlements. This section shall not beconstrued or interpreted to relieve or exempt any person or entity from anyduties, obligations or rights imposed or provided by the StructuredSettlement Protection Act (§ 59.1-475 et seq.), as amended from time to time.
(1964, c. 219, § 8.9-318; 1973, c. 509; 2000, c. 1007; 2003, c. 340.)