State Codes and Statutes
Statutes > Utah > Title-70a > Chapter-09a > 70a-9a-40870A-9a-408. Restrictions on assignment of promissory notes,health-care-insurance receivables, and certain general intangibles ineffective.
(1) Except as otherwise provided in Subsection (2), a term in a promissory note or in anagreement between an account debtor and a debtor which relates to a health-care-insurancereceivable or a general intangible, including a contract, permit, license, or franchise, and whichterm prohibits, restricts, or requires the consent of the person obligated on the promissory note orthe account debtor to, the assignment or transfer of, or creation, attachment, or perfection of asecurity interest in, the promissory note, health-care-insurance receivable, or general intangible, isineffective to the extent that the term:
(a) would impair the creation, attachment, or perfection of a security interest; or
(b) provides that the assignment or transfer or the creation, attachment, or perfection ofthe 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-insurancereceivable, or general intangible.
(2) Subsection (1) applies to a security interest in a payment intangible or promissorynote only if the security interest arises out of a sale of the payment intangible or promissory note.
(3) A rule of law, statute, or regulation that prohibits, restricts, or requires the consent ofa government, governmental body or official, person obligated on a promissory note, or accountdebtor 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, orfranchise between an account debtor and a debtor, is ineffective to the extent that the rule of law,statute, or regulation:
(a) would impair the creation, attachment, or perfection of a security interest; or
(b) provides that the assignment or transfer or the creation, attachment, or perfection ofthe 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-insurancereceivable, or general intangible.
(4) To the extent that a term in a promissory note or in an agreement between an accountdebtor and a debtor which relates to a health-care-insurance receivable or general intangible or arule of law, statute, or regulation described in Subsection (3) would be effective under law otherthan this chapter but is ineffective under Subsection (1) or (3), the creation, attachment, orperfection of a security interest in the promissory note, health-care-insurance receivable, orgeneral intangible:
(a) is not enforceable against the person obligated on the promissory note or the accountdebtor;
(b) does not impose a duty or obligation on the person obligated on the promissory noteor the account debtor;
(c) does not require the person obligated on the promissory note or the account debtor torecognize the security interest, pay or render performance to the secured party, or accept paymentor performance from the secured party;
(d) does not entitle the secured party to use or assign the debtor's rights under thepromissory note, health-care-insurance receivable, or general intangible, including any relatedinformation or materials furnished to the debtor in the transaction giving rise to the promissorynote, health-care-insurance receivable, or general intangible;
(e) 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 accountdebtor; and
(f) does not entitle the secured party to enforce the security interest in the promissorynote, health-care-insurance receivable, or general intangible.
Enacted by Chapter 252, 2000 General Session
