2006 New York Code - Discharge Of Account Debtor; Notification Of Assignment; Identification And Proof Of Assignment; Restrictions On Assignment Of Accounts, Chattel Paper

 
  Section 9--406. Discharge of Account Debtor; Notification of Assignment;
                    Identification  and  Proof of Assignment; Restrictions
                    on Assignment  of  Accounts,  Chattel  Paper,  Payment
                    Intangibles, and Promissory Notes Ineffective.
    (a) Discharge  of  account  debtor; effect of notification. Subject to
  subsections (b) through (h), 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 the
  amount 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 the assignee and  may  not
  discharge the obligation by paying the assignor.
    (b) When   notification   ineffective.   Subject  to  subsection  (g),
  notification is ineffective 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 of a payment intangible limits the account  debtor's
             duty to pay a person other than the seller and the limitation
             is effective under law other than this article; or
         (3) at  the  option  of  an  account  debtor, if the notification
             notifies the account debtor to make less than the full amount
             of any installment or other periodic payment to the assignee,
             even if:
             (A) only a portion of the account, chattel paper, or  payment
                 intangible has been 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 (g),  if  requested  by
  the  account  debtor,  an  assignee  shall seasonably furnish reasonable
  proof that the assignment has been made. Unless the  assignee  complies,
  the  account debtor may discharge its obligation by paying the assignor,
  even if the account debtor has received a notification under  subsection
  (a).
    (d) Term  restricting  assignment  generally  ineffective.  Except  as
  otherwise provided in subsection (e) and Sections  2-A-303  and  9--407,
  and subject to subsection (g), a term in an agreement between an account
  debtor  and  an  assignor  or in a promissory note is ineffective to the
  extent that it:
         (1) prohibits, restricts, or requires the consent of the  account
             debtor  or  person  obligated  on  the promissory note to the
             assignment or  transfer  of,  or  the  creation,  attachment,
             perfection,  or  enforcement  of  a security interest in, 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  a  default,  breach,  right of
             recoupment,   claim,   defense,   termination,    right    of
             termination,  or  remedy  under  the  account, chattel paper,
             payment intangible, or promissory note.
    (e) Inapplicability of subsection (d) to certain sales. Subsection (d)
  does not apply to the sale of a payment intangible or promissory note.
    (f) Subsection (b)(3) not waivable.  Subject  to  subsection  (g),  an
  account debtor may not waive or vary its option under subsection (b)(3).
    (g) Rule  for individual under other law. This section is subject to a
  rule of law, statute, rule or regulation other than this  article  which
  establishes  a different rule for an account debtor who is an individual
  and who incurred the  obligation  primarily  for  personal,  family,  or
  household purposes.
    (h) Inapplicability. This section does not apply to:
         (1) an  assignment  of  a health care insurance receivable to the
             extent such  assignment  conflicts  with  other  law  or  the
             parties have otherwise agreed in writing that such receivable
             is non-assignable,
         (2) a  claim  or  right  to  receive compensation for injuries or
             sickness as described in 26 U.S.C. § 104(a)(1)  and  (2),  as
             amended from time to time, or
         (3) a  claim  or  right to receive benefits under a special needs
             trust as described in 42 U.S.C. § 1396p  (d)(4),  as  amended
             from time to time.