Alabama § 7-9A-403 Agreement Not to Assert Defenses Against Assignee

Alabama Statutes

§ 7-9A-403 — Agreement Not to Assert Defenses Against Assignee

Alabama § 7-9A-403

Title 7Commercial Code

Art. 9ASecured Transactions

Part 4Rights of Third Parties

This text of Alabama § 7-9A-403 (Agreement Not to Assert Defenses Against Assignee) is published on Counsel Stack Legal Research, covering Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Ala. Code § 7-9A-403 (2026).

Text

(a)“Value.” In this section, “value” has the meaning provided in Section 7-3-303(a).

(b)Agreement not to assert claim or defense. Except as otherwise provided in this section, an agreement between an account debtor and an assignor not to assert against an assignee any claim or defense that the account debtor may have against the assignor is enforceable by an assignee that takes an assignment:

(1)for value;

(2)in good faith;

(3)without notice of a claim of a property or possessory right to the property assigned; and

(4)without notice of a defense or claim in recoupment of the type that may be asserted against a person entitled to enforce a negotiable instrument under Section 7-3-305(a).

(c)When subsection (b) not applicable. Subsection (b) does not apply to defenses of a type that ma

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(a) “Value.” In this section, “value” has the meaning provided in Section 7-3-303(a).
(b) Agreement not to assert claim or defense. Except as otherwise provided in this section, an agreement between an account debtor and an assignor not to assert against an assignee any claim or defense that the account debtor may have against the assignor is enforceable by an assignee that takes an assignment:
(1) for value;
(2) in good faith;
(3) without notice of a claim of a property or possessory right to the property assigned; and
(4) without notice of a defense or claim in recoupment of the type that may be asserted against a person entitled to enforce a negotiable instrument under Section 7-3-305(a).
(c) When subsection (b) not applicable. Subsection (b) does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under Section 7-3-305(b).
(d) Omission of required statement in consumer transaction. In a consumer transaction, if a record evidences the account debtor’s obligation, if law other than this article requires that the record include a statement to the effect that the rights of an assignee are subject to claims or defenses that the account debtor could assert against the original obligee, and if the record does not include such a statement:
(1) the record has the same effect as if the record included such a statement; and
(2) the account debtor may assert against an assignee those claims and defenses that would have been available if the record included such a statement.
(e) Rule for individual under other law. This section is subject to law other than this article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
(f) Other law not displaced. Except as otherwise provided in subsection (d), this section does not displace law other than this article which gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee.