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Michigan Laws 440.9406 - 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

Michigan Laws > Chapter 440 > Act 174 of 1962 > Article 9 > Part 4 > 440.9406


Current as of: 2013

(1) Subject to subsections (2) through (9), 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.

(2) Subject to subsection (8), notification is ineffective under subsection (1) if 1 or more of the following apply:

(a) If notification does not reasonably identify the rights assigned.

(b) 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 article.

(c) 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 1 or more of the following occur:

(i) Only a portion of the account, chattel paper, or payment intangible has been assigned to that assignee.

(ii) A portion has been assigned to another assignee.

(iii) The account debtor knows that the assignment to that assignee is limited.

(3) Subject to subsection (8), 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 (1).

(4) Except as otherwise provided in subsection (5) and sections 2A303 and 9407, and subject to subsection (8), a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it does 1 or more of the following:

(a) 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.

(b) 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.

(5) Subsection (4) does not apply to the following:

(a) A claim or right to receive an amount that would be excluded from gross income under section 104(a)(1) or (2) of the internal revenue code of 1986, 26 U.S.C. 104.

(b) A claim or right to receive benefits from a special needs trust. For purposes of this subdivision, a

Michigan Laws 440.9405 - Modification of assigned contractPart 4 Table of ContentsMichigan Laws 440.9406.amended - 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

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Comments (4)add comment
Karen: ...
So what if the note was in two peoples' name. And they failed to contact either person concerning repayment. And is coming after one of them not both. The one who wasn't even employeed at the time of the loan signature?
1

February 16, 2012
Steven Daily: ...
The creditor on a joint debt can pursue collection from one debtor or both. It is strictly their choice. Typically they try to collect from both, or whoever is most likely to pay.
2

February 16, 2012
Karen: ...
but aren't they obligated to send a letter for some form of payment like everybody else? Or is this the signers responsibility to fulfill. Without a account/loan # or address?
3

February 16, 2012
Steven Daily: ...
A debtor has the right to receive notice and "validation" of the debt from a debt collector, if that is what this is about. You can read more here:

http://www.lawserver.com/law/country/us/code/15_usc_1692f
4

February 17, 2012

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