{"data":{"id":"us-ky/krs-355.12-106","jurisdiction":"us-ky","citation":"KRS 355.12-106","heading":"Discharge of account debtor on controllable account or controllable","body":"payment intangible.\n(1) An account debtor on a controllable account or controllable payment intangible\nmay discharge its obligation by paying:\n(a) The person having control of the controllable electronic record that evidences\nthe controllable account or controllable payment intangible; or\n(b) Except as provided in subsection (2) of this section, a person that formerly\nhad control of the controllable electronic record.\n(2) Subject to subsection (4) of this section, the account debtor may not discharge its\nobligation by paying a person that formerly had control of the controllable\nelectronic record if the account debtor receives a notification that:\n(a) Is signed by a person that formerly had control or the person to which control\nwas transferred;\n(b) Reasonably identifies the controllable account or controllable payment\nintangible;\n(c) Notifies the account debtor that control of the controllable electronic record\nthat evidences the controllable account or controllable payment intangible was\ntransferred;\n(d) Identifies the transferee, in any reasonable way, including by name,\nidentifying number, cryptographic key, office, or account number; and\n(e) Provides a commercially reasonable method by which the account debtor is to\npay the transferee.\n(3) After receipt of a notification that complies with subsection (2) of this section, the\naccount debtor may discharge its obligation by paying in accordance with the\nnotification and may not discharge the obligation by paying a person that formerly\nhad control.\n(4) Subject to subsection (8) of this section, notification is ineffective under subsection\n(2) of this section:\n(a) Unless, before the notification is sent, the account debtor and the person that,\nat that time, had control of the controllable electronic recor d that evidences\nthe controllable account or controllable payment intangible agree in a signed\nrecord to a commercially reasonable method by which a person may furnish\nreasonable proof that control has been transferred;\n(b) To the extent an agreement betwe en the account debtor and seller of a\npayment intangible limits the account debtor's duty to pay a person other than\nthe seller and the limitation is effective under law other than this article; or\n(c) At the option of the account debtor, if the notificati on notifies the account\ndebtor to:\n1. Divide a payment;\n2. Make less than the full amount of an installment or other periodic\npayment; or\n3. Pay any part of a payment by more than one (1) method or to more than\none (1) person.\n(5) Subject to subsection (8)  of this section, if requested by the account debtor, the\nperson giving the notification under subsection (2) of this section seasonably shall\nfurnish reasonable proof, using the method in the agreement referred to in\nsubsection (4)(a) of this section, tha t control of the controllable electronic record\nhas been transferred. Unless the person complies with the request, the account\ndebtor may discharge its obligation by paying a person that formerly had control,\neven if the account debtor has received a notif ication under subsection (2) of this\nsection.\n(6) A person furnishes reasonable proof under subsection (5) of this section that control\nhas been transferred if the person demonstrates, using the method in the agreement\nreferred to in subsection (4)(a) of this section, that the transferee has the power to:\n(a) Avail itself of substantially all the benefit from the controllable electronic\nrecord;\n(b) Prevent others from availing themselves of substantially all the benefit from\nthe controllable electronic record; and\n(c) Transfer the powers specified in paragraphs (a) and (b) of this subsection to\nanother person.\n(7) Subject to subsection (8) of this section, an account debtor may not waive or vary\nits rights under subsections (4)(a) and (5) of this section or its option under\nsubsection (4)(c) of this section.\n(8) This section is subject to law other than this article which establishes a different\nrule for an account debtor who is an individual and who incurred the obligation\nprimarily for personal, family, or household purposes.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=55723","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:49Z","sha256":"911b634df7b417a807d53683bff95edbfbc5728201296bc78c904fbf90ee648c","source_id":"us-ky","stale":false,"prev":"us-ky/krs-355.12-105","next":"us-ky/krs-355.12-107"},"notice":"GroundRules: Original legal text. Not legal advice."}