Michigan Laws 440.9403 – Agreement not to assert defenses against assignee
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(1) As used in this section, “value” has the meaning provided in section 3303(1).
(2) 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 for value, in good faith, without notice of a claim of a property or possessory right to the property assigned, and 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 section 3305(1).
Terms Used In Michigan Laws 440.9403
- Account debtor: means a person obligated on an account, chattel paper, or general intangible. See Michigan Laws 440.9102
- Consumer: means an individual who enters into a transaction primarily for personal, family, or household purposes. See Michigan Laws 440.1201
- Debtor: means 1 of the following:
(i) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor. See Michigan Laws 440.9102Good faith: except as otherwise provided in article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing. See Michigan Laws 440.1201 Holder: means any of the following:
(i) A person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession. See Michigan Laws 440.1201Instrument: means a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary indorsement or assignment. See Michigan Laws 440.9102 Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period. Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, public corporation, or any other legal or commercial entity. See Michigan Laws 440.1201 Record: means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. See Michigan Laws 440.1201 Right: includes remedy. See Michigan Laws 440.1201
(3) Subsection (2) does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under section 3305(2).
(4) 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, all of the following apply:
(a) The record has the same effect as if the record included such a statement.
(b) The account debtor may assert against an assignee those claims and defenses that would have been available if the record included such a statement.
(5) This section is subject to law other than this article that establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes.
(6) Except as otherwise provided in subsection (4), this section does not displace law other than this article that gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee.