Idaho State Statutes - Idaho Attorney Directory

28-9-406 - 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

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) Subject to subsections (b) through (i) of this section, 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) Subject to subsection (h) of this section, notification is
ineffective under subsection (a) of this section:
(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 chapter; 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) Subject to subsection (h) of this section, 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) of this section.
(d) Except as otherwise provided in subsection (e) of this section and
sections 28-9-407 and 28-12-303, and subject to subsection (h) of this
section, 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) Subsection (d) of this section does not apply to the sale of a
payment intangible or promissory note.
(f) Except as otherwise provided in sections 28-9-407 and 28-12-303 and
subject to subsections (h) and (i) of this section, a rule of law, statute,
rule or regulation that prohibits, restricts, or requires the consent of a
government, governmental body or official, or account debtor to the assignment
or transfer of, or creation of a security interest in, an account or chattel
paper is ineffective to the extent that the rule of law, statute, rule or
regulation:
(1) Prohibits, restricts or requires the consent of the government,
governmental body or official, or account debtor to the assignment or
transfer of, or the creation, attachment, perfection, or enforcement of a
security interest in the account or chattel paper; 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 or chattel paper.
(g) Subject to subsection (h) of this section, an account debtor may not
waive or vary its option under subsection (b)(3) of this section.
(h) This section is subject to law other than this chapter 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.
(i) This section does not apply to an assignment of a health care
insurance receivable, an award of compensation made pursuant to the crime
victims compensation act, chapter 10, title 72, Idaho Code, or a lottery prize
subject to the provisions of chapter 74, title 67, Idaho Code.

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