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Can you summarize IACO 554.9406?
UNIFORM COMMERCIAL CODE > 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.
Short Summary
This section of the Iowa Code, specifically under the Uniform Commercial Code, governs the discharge of account debtors, notification of assignment, identification and proof of assignment, and restrictions on the assignment of accounts, chattel paper, payment intangibles, and promissory notes. It establishes that an account debtor may discharge its obligation by paying the assignor until it receives a notification, authenticated by the assignor or assignee, stating that the amount due has been assigned and payment should be made to the assignee. The notification must reasonably identify the rights assigned, and certain limitations on payment may render the notification ineffective. If requested, the assignee must provide reasonable proof of the assignment. Additionally, any term in an agreement or promissory note that prohibits or restricts the assignment or transfer of the account, chattel paper, payment intangible, or promissory note is generally ineffective. However, certain sales and legal restrictions may be exempted. The section also specifies that an account debtor may not waive or vary its option to make partial payments to the assignee. It is important to note that this section may not apply to certain types of assignments, such as health care insurance receivables or controllable accounts or payment intangibles.
Whom does it apply to?
Account debtors, assignors, and assignees involved in the assignment of accounts, chattel paper, payment intangibles, and promissory notes
What does it govern?
Discharge of account debtor, notification of assignment, identification and proof of assignment, restrictions on assignment of accounts, chattel paper, payment intangibles, and promissory notes
What are exemptions?
This section does not apply to the assignment of a health care insurance receivable. Subsections 1 through 3 and 7 do not apply to a controllable account or controllable payment intangible.
What are the Penalties?
No penalties mentioned.
Jurisdiction
Iowa