Chapter 4. Rights of Third Parties - California Commercial Code Section 9403
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California Laws > Commercial Code > Chapter 4. Rights of Third Parties - California Commercial Code Section 9403
9403. (a) In this section, "value" has the meaning provided in
subdivision (a) of Section 3303.
(b) 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 that satisfies all of the following conditions:
(1) It is taken for value.
(2) It is taken in good faith.
(3) It is taken without notice of a claim of a property or
possessory right to the property assigned.
(4) It is taken 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 subdivision (a) of Section
(c) Subdivision (b) does not apply to defenses of a type that may
be asserted against a holder in due course of a negotiable instrument
under subdivision (b) of Section 3305.
(d) In a consumer transaction, if a record evidences the account
debtor's obligation, law other than this division 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 the record does not
include such a statement, then both of the following apply:
(1) The record has the same effect as if the record included such
(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) This section is subject to law other than this division 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) Except as otherwise provided in subdivision (d), this section
does not displace law other than this division which gives effect to
an agreement by an account debtor not to assert a claim or defense
against an assignee.
Last modified: February 16, 2015