California Commercial Code

§ 9408

COM § 9408 Effective Jan 1, 2024Div. 9 · Ch. 4

Statute text

(a)Except as otherwise provided in subdivisions (b) and (f), a term in a promissory note or in an agreement between an account debtor and a debtor that 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 the 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 does, or would do, either of the following:

(1)It would impair the creation, attachment, or perfection of a security interest.

(2)It 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.

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Legislative history

Amended by Stats. 2023, Ch. 210, Sec. 58. (SB 95) Effective January 1, 2024.