2012 Pennsylvania Consolidated Statutes
Title 13 - COMMERCIAL CODE
Chapter 94 - Rights of Third Parties
Section 9408 - Restrictions on assignment of promissory notes, health-care-insurance receivables and certain general intangibles ineffective

     § 9408.  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 subsections (b) and (e), 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)  Legal restrictions on assignment generally
     ineffective.--Except as otherwise provided in subsection (e), a
     rule of law, statute or regulation which prohibits, restricts or
     requires the consent of a government, governmental body or
     official, person obligated on a promissory note or account
     debtor to the assignment or transfer of, or creation of a
     security interest in, a promissory note, health-care-insurance
     receivable or general intangible, including a contract, permit,
     license or franchise between an account debtor and a debtor, is
     ineffective to the extent that the rule of law, statute or
     regulation:
            (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.
        (d)  Limitation on ineffectiveness under subsections (a) and
     (c).--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 or a
     rule of law, statute or regulation described in subsection (c)
     would be effective under law other than this division but is
     ineffective under subsection (a) or (c), 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.
        (e)  Section prevails over inconsistent law.--
            (1)  Except as set forth in paragraphs (2), (3) and (4),
        this section prevails over any inconsistent provision of any
        existing or future statute or regulation of the Commonwealth
        unless the provision is contained in a statute of the
        Commonwealth, refers expressly to this section and states
        that the provision prevails over this section.
            (2)  Subsection (c) does not apply to the provisions,
        claims and rights listed in section 9406(j)(3) (relating to
        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).
            (3)  Subsections (a) and (c) do not apply to the claims
        and rights described in section 9406(j)(4).
            (4)  The limitations on restrictions of assignments
        contained in this section are inapplicable to transfers of
        structured settlement payment rights pursuant to the act of
        February 11, 2000 (P.L.1, No.1), known as the Structured
        Settlement Protection Act.

        Cross References.  Section 9408 is referred to in section
     9401 of this title.