KRS 355.9-404: Rights acquired by assignee -- Claims and defenses against assignee.

(1) Unless an account debtor has made an enforceable agreement not to assert defenses

or claims, and subject to subsections (2) to (5) of this section, the rights of an

assignee are subject to:

(a) All terms of the agreement between the account debtor and assignor and any

defense or claim in recoupment arising from the transaction that gave rise to

the contract; and

(b) Any other defense or claim of the account debtor against the assignor which

accrues before the account debtor receives a notification of the assignment

signed by the assignor or the assignee.

(2) Subject to subsection (3) of this section and except as otherwise provided in

subsection (4) of this section , the claim of an account debtor against an assignor

may be asserted against an assignee under subsection (1) of this section only to

reduce the amount the account debtor owes.

(3) This section is subject to law other than this article which establishes a different

rule for an account debtor who is an individual and who incurred the obligation

primarily for personal, family, or household purposes.

(4) In a consumer transaction, if a record evidences the account debtor's obligation, law

other than this artic le requires that the record include a statement to the effect that

the account debtor's recovery against an assignee with respect to claims and

defenses against the assignor may not exceed amounts paid by the account debtor

under the record, and the record does not include such a statement, the extent to

which a claim of an account debtor against the assignor may be asserted against an

assignee is determined as if the record included such a statement.

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