70A-9a-408. Restrictions on assignment of promissory notes,
health-care-insurance receivables, and certain general intangibles ineffective.
(1) Except as otherwise provided in Subsection (2), a term in a promissory note or in an
agreement between an account debtor and a debtor which relates to a health-care-insurance
receivable or a general intangible, including a contract, permit, license, or franchise, and which
term prohibits, restricts, or requires the consent of the person obligated on the promissory note or
the account debtor to, the assignment or transfer of, or creation, attachment, or perfection of a
security interest in, the promissory note, health-care-insurance receivable, or general intangible, is
ineffective to the extent that the term:
(a) would impair the creation, attachment, or perfection of a security interest; or
(b) provides that the assignment or transfer or the creation, attachment, or perfection of
the security interest may give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination, or remedy under the promissory note, health-care-insurance
receivable, or general intangible.
(2) Subsection (1) applies to a security interest in a payment intangible or promissory
note only if the security interest arises out of a sale of the payment intangible or promissory note.
(3) A rule of law, statute, or regulation that prohibits, restricts, or requires the consent of
a government, governmental body or official, person obligated on a promissory note, or account
debtor to the assignment or transfer of, or creation of a security interest in, a promissory note,
health-care-insurance receivable, or general intangible, including a contract, permit, license, or
franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law,
statute, or regulation:
(a) would impair the creation, attachment, or perfection of a security interest; or
(b) provides that the assignment or transfer or the creation, attachment, or perfection of
the security interest may give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination, or remedy under the promissory note, health-care-insurance
receivable, or general intangible.
(4) To the extent that a term in a promissory note or in an agreement between an account
debtor and a debtor which relates to a health-care-insurance receivable or general intangible or a
rule of law, statute, or regulation described in Subsection (3) would be effective under law other
than this chapter but is ineffective under Subsection (1) or (3), the creation, attachment, or
perfection of a security interest in the promissory note, health-care-insurance receivable, or
general intangible:
(a) is not enforceable against the person obligated on the promissory note or the account
debtor;
(b) does not impose a duty or obligation on the person obligated on the promissory note
or the account debtor;
(c) does not require the person obligated on the promissory note or the account debtor to
recognize the security interest, pay or render performance to the secured party, or accept payment
or performance from the secured party;
(d) does not entitle the secured party to use or assign the debtor's rights under the
promissory note, health-care-insurance receivable, or general intangible, including any related
information or materials furnished to the debtor in the transaction giving rise to the promissory
note, health-care-insurance receivable, or general intangible;
(e) does not entitle the secured party to use, assign, possess, or have access to any trade
secrets or confidential information of the person obligated on the promissory note or the account
debtor; and
(f) does not entitle the secured party to enforce the security interest in the promissory
note, health-care-insurance receivable, or general intangible.
Enacted by Chapter 252, 2000 General Session
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Last revised: Thursday, May 28, 2009