Texas Business & Commerce Code

§ 9.406 — 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

BC § 9.406Title 1. UNIFORM COMMERCIAL CODE · Ch. 9. SECURED TRANSACTIONS · Art. D. RIGHTS OF THIRD PARTIES

Statute text

(a)Subject to Subsections (b)-(i), 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.

(b)Subject to Subsection (h), notification is ineffective under Subsection (a):

(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;

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Legislative history

Acts 2009, 81st Leg., R.S., Ch. 84 (S.B. 1442), Sec. 60, eff. September 1, 2009. Acts 2011, 82nd Leg., R.S., Ch. 67 (S.B. 782), Sec. 9, eff. July 1, 2013.