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

Section 9--403. Agreement Not to Assert Defenses Against Assignee.\n (a) "Value." In this section, "value" has the meaning provided in\nSection 3--303. In this section the meaning of "obligor" is not limited\nto the meaning given it in Section 9--102(a)(59). In this section the\nterm "person entitled to enforce the instrument" means (i) the holder of\nthe instrument, (ii) a nonholder in possession of the instrument who has\nthe rights of a holder, or (iii) a person not in possession of the\ninstrument who is entitled to enforce the instrument pursuant to Article\n3 of this chapter. A person may be a person entitled to enforce the\ninstrument even though the person is not the owner of the instrument or\nis in wrongful possession of the instrument.\n (b) Agreement not to assert claim or defense. Except as otherwise\nprovided in this section, an agreement between an account debtor and an\nassignor not to assert against an assignee any claim or defense that the\naccount debtor may have against the assignor is enforceable by an\nassignee that takes an assignment:\n (1) for value;\n (2) in good faith;\n (3) without notice of a claim of a property or possessory right\n to the property assigned; and\n (4) without notice of:\n (A) a defense of the obligor based on (i) infancy of the\n obligor to the extent it is a defense to a simple\n contract, (ii) duress, lack of legal capacity, or\n illegality of the transaction which, under other law,\n nullifies the obligation of the obligor, (iii) fraud that\n induced the obligor to sign the instrument with neither\n knowledge nor reasonable opportunity to learn of its\n character or its essential terms, or (iv) discharge of\n the obligor in solving proceedings;\n (B) a defense of the obligor stated anywhere in Article 3 of\n this chapter or a defense of the obligor that would be\n available if the person entitled to enforce the\n instrument were enforcing a right to payment under a\n simple contract; and\n (C) a claim in recoupment of the obligor against the assignor\n if the claim arose from the transaction that gave rise to\n the assigned obligation, but the claim of the obligor may\n be asserted against an assignee only to reduce the amount\n owing on the assigned obligation at the time the action\n is brought.\n (c) When subsection (b) not applicable. An assignee takes subject to\nthe defenses listed in paragraph (b)(4)(A), but is not subject to\ndefenses of the obligor stated in paragraph (b)(4)(B) or claims in\nrecoupment stated in paragraph (b)(4)(C) against a person other than the\nenforcing assignee.\n (d) Omission of required statement in consumer transaction. In a\nconsumer transaction, if a record evidences the account debtor's\nobligation, law other than this article requires that the record include\na statement to the effect that the rights of an assignee are subject to\nclaims or defenses that the account debtor could assert against the\noriginal obligee, and the record does not include such a statement:\n (1) the record has the same effect as if the record included such\n a statement; and\n (2) the account debtor may assert against an assignee those\n claims and defenses that would have been available if the\n record included such a statement.\n (e) Rule for individual under other law. This section is subject to\nlaw other than this article which establishes a different rule for an\naccount debtor who is an individual and who incurred the obligation\nprimarily for personal, family, or household purposes.\n (f) Other law not displaced. Except as otherwise provided in\nsubsection (d), this section does not displace law other than this\narticle which gives effect to an agreement by an account debtor not to\nassert a claim or defense against an assignee.\n