A. Subject to subsections B through H 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.

Terms Used In Arizona Laws 47-9406

  • Account debtor: means a person obligated on an account, chattel paper or general intangible but does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper. See Arizona Laws 47-9102
  • Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
  • Chattel paper: means a record or records that evidence both a monetary obligation and a security interest in specific goods, a security interest in specific goods and software used in the goods, a security interest in specific goods and license of software used in the goods, a lease of specific goods or a lease of specific goods and license of software used in the goods. See Arizona Laws 47-9102
  • Collateral: means the property subject to a security interest or agricultural lien. See Arizona Laws 47-9102
  • Debtor: means :

    (a) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;

    (b) A seller of accounts, chattel paper, payment intangibles or promissory notes; or

    (c) A consignee. See Arizona Laws 47-9102

  • Health-care-insurance receivable: means an interest in or claim under a policy of insurance that is a right to payment of a monetary obligation for health care goods or services provided. See Arizona Laws 47-9102
  • 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.
  • Payment intangible: means a general intangible under which the account debtor's principal obligation is a monetary obligation. See Arizona Laws 47-9102
  • Person: includes a corporation, company, partnership, firm, association or society, as well as a natural person. See Arizona Laws 1-215
  • Promissory note: means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds. See Arizona Laws 47-9102
  • Statute: A law passed by a legislature.

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 47-2A303 and 47-9407, 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, other than a sale pursuant to a disposition under section 47-9610 or an acceptance of collateral under section 47-9620.

F. Except as otherwise provided in sections 47-2A303 and 47-9407 and subject to subsections H and J of this section, a rule of law, statute 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 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 shall not waive or vary its option under subsection B, paragraph 3 of this section.

H. This section is subject to law other than this chapter 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.

I. This section does not apply to an assignment of a health-care-insurance receivable.

J. This section prevails over any inconsistent provisions in any statutes, rules and regulations.

 

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