47-9406

47-9406. 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. Subject to subsections B through H of this section, 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. Subject to subsection H of this section, notification is ineffective under
subsection A of this section:

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 chapter; 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. Subject to subsection H of this section, 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 of this section.

D. Except as otherwise provided in subsection E of this section and sections
47-2A303 and 47-9407, and subject to subsection H of this section, 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. Subsection D of this section does not apply to the sale of a payment intangible
or promissory note.

F. Except as otherwise provided in sections 47-2A303 and 47-9407 and subject to
subsections H and J of this section, a rule of law, statute or regulation that prohibits,
restricts or requires the consent of a government, governmental body or official, or
account debtor to the assignment or transfer of, or creation of a security interest in,
an account or chattel paper, is ineffective to the extent that the 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 or transfer of, or the creation,
attachment, perfection or enforcement of a security interest in, the account or chattel
paper; or

G. Subject to subsection H of this section, an account debtor shall not waive or
vary its option under subsection B, paragraph 3 of this section.

H. This section is subject to law other than this chapter that establishes a
different rule for an account debtor who is an individual and who incurred the obligation
primarily for personal, family or household purposes.

I. This section does not apply to an assignment of a health-care-insurance
receivable.

J. This section prevails over any inconsistent provisions in any statutes, rules
and regulations.