47-9408. Restrictions on assignment of
promissory notes, health-care-insurance receivables and certain
general intangibles ineffective
A. Except as otherwise provided in subsection B, a term in a promissory note or in
an agreement between an account debtor and a debtor that 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. 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. A rule of law, statute or regulation that 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. To the extent that a term in a promissory note or in an agreement between an
account debtor and a debtor that 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 chapter 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. This section prevails over any inconsistent provisions in title 33, chapter 7.
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