{"data":{"id":"us-ky/krs-355.9-406","jurisdiction":"us-ky","citation":"KRS 355.9-406","heading":"Discharge of account debtor -- Notification of assignment --","body":"Identification and proof of assignment -- Restrictions on assignment of\naccounts, chattel paper, payment intangibles, and promissory notes ineffective.\n(1) Subject to subs ections (2) to (9) and (12) of this section, an account debtor on an\naccount, chattel paper, or a payment intangible may discharge its obligation by\npaying the assignor until, but not after, the account debtor receives a notification,\nsigned by the assigno r or the assignee, that the amount due or to become due has\nbeen assigned and that payment is to be made to the assignee. After receipt of the\nnotification, the account debtor may discharge its obligation by paying the assignee\nand may not discharge the obligation by paying the assignor.\n(2) Subject to subsections (8) and (12) of this section, notification is ineffective under\nsubsection (1) of this section:\n(a) If it does not reasonably identify the rights assigned;\n(b) To the extent that an agreement betw een an account debtor and a 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 an account debtor, if the notificat ion notifies the account\ndebtor to make less than the full amount of any installment or other periodic\npayment to the assignee, even if:\n1. Only a portion of the account, chattel paper, or payment intangible has\nbeen assigned to that assignee;\n2. A portion has been assigned to another assignee; or\n3. The account debtor knows that the assignment to that assignee is\nlimited.\n(3) Subject to subsections (8) and (12) of this section, if requested by the account\ndebtor, an assignee shall seasonably furnish reasonable proof that the assignment\nhas been made. Unless the assignee complies, the account debtor may discharge its\nobligation by paying the assignor, even if the account debtor has received a\nnotification under subsection (1) of this section.\n(4) (a) In this subsection, \"promissory note\" includes a negotiable instrument that\nevidences chattel paper.\n(b) Except as otherwise provid ed in subsections (5) and (11) of this section and\nKRS 355.2A-303 and 355.9-407, and subject to subsection (8) of this section,\na term in an agreement between an account debtor and an assignor or in a\npromissory note is ineffective to the extent that it:\n1. Prohibits, restricts, or requires the consent of the account debtor or\nperson obligated on the promissory note to the assignment or transfer of,\nor the creation, attachment, perfection, or enforcement of a security\ninterest in, the account, chattel paper, payment intangible, or promissory\nnote; or\n2. Provides that the assignment or transfer or the creation, attachment,\nperfection, or enforcement of the security interest may give rise to a\ndefault, breach, right of recoupment, claim, defense, termination, right\nof termination, or remedy under the account, chattel paper, payment\nintangible, or promissory note.\n(5) Subsection (4) of this section does not apply to the sale of a payment intangible or\npromissory note, other than a sale pursuant to a disposition under KRS 355.9-610 or\nan acceptance of collateral under KRS 355.9-620.\n(6) Except as otherwise provided in subsection (11) of this section and KRS 355.2A -\n303 and 355.9 -407 and subject to subsections (8) and (9) of this section, a rule of\nlaw, statute, or regulation that prohibits, restricts, or requires the consent of a\ngovernment, governmental body or official, or account debtor to the assignment or\ntransfer of, or creation of a security interest in, an account or chattel paper is\nineffective to the extent that the rule of law, statute, or regulation:\n(a) Prohibits, restricts, or requires the consent of the government, governmental\nbody or official, or account debtor to the assignment or transfer of, or the\ncreation, attachment, perfection, or enforcement of a security interest in the\naccount or chattel paper; or\n(b) Provides that the assignment or transfer or the creation, attachment,\nperfection, or enforcement of the security interest may give rise to a default,\nbreach, right of recoupment, claim, defense , termination, right of termination,\nor remedy under the account or chattel paper.\n(7) Subject to subsections (8) and (12) of this section, an account debtor may not waive\nor vary its option under subsection (2)(c) of this section.\n(8) This section is subj ect 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.\n(9) This section does not apply to an assignment of a health-care-insurance receivable.\n(10) Reserved.\n(11) Subsections (4) and (6) of this section do not apply to a security interest in an\nownership interest in a general partnership, limited partnership, or limited liability\ncompany.\n(12) Subsections (1) to (3 ) and (7) of this section do not apply to a controllable account\nor controllable payment intangible.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=55701","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:48Z","sha256":"ad95b6a8efe2612c3f9375921a21a24fcfbd7a6d2ede4f9b7851a66496bd2a43","source_id":"us-ky","stale":false,"prev":"us-ky/krs-355.9-405","next":"us-ky/krs-355.9-407"},"notice":"GroundRules: Original legal text. Not legal advice."}