Section 9--403. Agreement Not to Assert Defenses Against Assignee.(a) "Value." In this section, "value" has the meaning provided in Section 3--303. In this section the meaning of "obligor" is not limited to the meaning given it in Section 9--102(a)(59). In this section the term "person entitled to enforce the instrument" means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to Article 3 of this chapter. A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.
(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) a defense of the obligor based on (i) infancy of the
obligor to the extent it is a defense to a simple
contract, (ii) duress, lack of legal capacity, or
illegality of the transaction which, under other law,
nullifies the obligation of the obligor, (iii) fraud that
induced the obligor to sign the instrument with neither
knowledge nor reasonable opportunity to learn of its
character or its essential terms, or (iv) discharge of
the obligor in solving proceedings;
(B) a defense of the obligor stated anywhere in Article 3 of
this chapter or a defense of the obligor that would be
available if the person entitled to enforce the
instrument were enforcing a right to payment under a
simple contract; and
(C) a claim in recoupment of the obligor against the assignor
if the claim arose from the transaction that gave rise to
the assigned obligation, but the claim of the obligor may
be asserted against an assignee only to reduce the amount
owing on the assigned obligation at the time the action
is brought.
(c) When subsection (b) not applicable. An assignee takes subject to the defenses listed in paragraph (b)(4)(A), but is not subject to defenses of the obligor stated in paragraph (b)(4)(B) or claims in recoupment stated in paragraph (b)(4)(C) against a person other than the enforcing assignee.
(d) Omission of required statement in consumer transaction. In a consumer transaction, if a record evidences the account debtor's obligation, 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 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.
Last modified: February 3, 2019