2023 New York Laws › UCC - Uniform Commercial Code › Article 9 - Secured Transactions › Part 4 - Rights of Third Parties › 9-406 - Discharge of Account Debtor; Notification of Assignment; Identification and Proof of Assignment; Restrictions on Assignment of Accounts, Chattel Paper

Section 9--406. 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) Discharge  of  account  debtor; effect of notification. Subject to
subsections (b) through (h), 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) When   notification   ineffective.   Subject  to  subsection  (g),
notification is ineffective under subsection (a):
(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 article; 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) the  account  debtor  knows  that  the assignment to that
assignee is limited.
(c) Proof of assignment. Subject to subsection (g),  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).
(d) Term  restricting  assignment  generally  ineffective.  Except  as
otherwise provided in subsection (e) and Sections  2-A-303  and  9--407,
and subject to subsection (g), 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) Inapplicability of subsection (d) to certain sales. Subsection (d)
does not apply to the sale of a payment intangible or promissory note.
(f) Subsection (b)(3) not waivable.  Subject  to  subsection  (g),  an
account debtor may not waive or vary its option under subsection (b)(3).
(g) Rule  for individual under other law. This section is subject to a
rule of law, statute, rule or regulation 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.
(h) Inapplicability. This section does not apply to:
(1) an  assignment  of  a health care insurance receivable to the
extent such  assignment  conflicts  with  other  law  or  the
parties have otherwise agreed in writing that such receivable
is non-assignable,
(2) a  claim  or  right  to  receive compensation for injuries or
sickness as described in 26 U.S.C. § 104(a)(1)  and  (2),  as
amended from time to time, or
(3) a  claim  or  right to receive benefits under a special needs
trust as described in 42 U.S.C. § 1396p  (d)(4),  as  amended
from time to time.