2006 New York Code - Restrictions On Assignment Of Promissory Notes, Health-care-insurance Receivables, And Certain General Intangibles Ineffective

 
  Section 9--408. Restrictions   on   Assignment   of   Promissory  Notes,
                    Health-care-insurance Receivables, and Certain General
                    Intangibles Ineffective.
    (a) Term  restricting  assignment  generally  ineffective.  Except  as
  otherwise  provided in subsection (b), a term in a promissory note or in
  an agreement between an account debtor and a debtor which relates  to  a
  health-care-insurance  receivable  or  a general intangible, including a
  contract, permit, license,  or  franchise,  and  which  term  prohibits,
  restricts,  or  requires  the  consent  of  the  person obligated on the
  promissory note or the account debtor to, the assignment or transfer of,
  or creation, attachment, or perfection of a security  interest  in,  the
  promissory    note,   health-care-insurance   receivable,   or   general
  intangible, is ineffective to the extent that the term:
         (1) would impair the creation, attachment,  or  perfection  of  a
             security interest; or
         (2) provides  that  the  assignment  or transfer or the creation,
             attachment, or perfection of the security interest  may  give
             rise  to  a  default,  breach,  right  of  recoupment, claim,
             defense, termination, right of termination, or  remedy  under
             the  promissory  note,  health-care-insurance  receivable, or
             general intangible.
    (b) Applicability of subsection (a) to  sales  of  certain  rights  to
  payment.  Subsection  (a)  applies  to  a security interest in a payment
  intangible or promissory note only if the security interest  arises  out
  of a sale of the payment intangible or promissory note.
    (c) Limitation  on ineffectiveness under subsection (a). To the extent
  that a term in a promissory note or in an agreement between  an  account
  debtor  and a debtor which relates to a health-care-insurance receivable
  or general intangible would be  effective  under  law  other  than  this
  article   but   is  ineffective  under  subsection  (a),  the  creation,
  attachment, or perfection of a security interest in the promissory note,
  health-care-insurance receivable, or general intangible:
         (1) is not  enforceable  against  the  person  obligated  on  the
             promissory note or the account debtor;
         (2) does  not impose a duty or obligation on the person obligated
             on the promissory note or the account debtor;
         (3) does not require the person obligated on the promissory  note
             or the account debtor to recognize the security interest, pay
             or render performance to the secured party, or accept payment
             or performance from the secured party;
         (4) does  not  entitle  the  secured  party  to use or assign the
             debtor's    rights     under     the     promissory     note,
             health-care-insurance   receivable,  or  general  intangible,
             including any related information or materials  furnished  to
             the  debtor  in the transaction giving rise to the promissory
             note,   health-care-insurance    receivable,    or    general
             intangible;
         (5) does  not  entitle the secured party to use, assign, possess,
             or  have  access  to  any  trade  secrets   or   confidential
             information of the person obligated on the promissory note or
             the account debtor; and
         (6) does  not  entitle  the secured party to enforce the security
             interest  in  the  promissory   note,   health-care-insurance
             receivable, or general intangible.
    (d) Inapplicability. This section does not apply to:
         (1)  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
         (2) 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.