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This entry was published on 2014-09-22
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Agreement Not to Assert Defenses Against Assignee
Uniform Commercial Code (UCC) CHAPTER 38, ARTICLE 9, PART 4
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.