Arizona Laws 47-9408. Restrictions on assignment of promissory notes, health-care-insurance receivables and certain general intangibles ineffective
A. Except as otherwise provided in subsection B of this section, 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 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:
Terms Used In Arizona Laws 47-9408
- Account debtor: means a person obligated on an account, chattel paper or general intangible but does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper. See Arizona Laws 47-9102
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Collateral: means the property subject to a security interest or agricultural lien. See Arizona Laws 47-9102
- Contract: A legal written agreement that becomes binding when signed.
- Debtor: means :
(a) A person having an interest, other than a security interest or other lien, in the collateral, whether or not the person is an obligor;
(b) A seller of accounts, chattel paper, payment intangibles or promissory notes; or
(c) A consignee. See Arizona Laws 47-9102
- General intangible: means any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money and oil, gas or other minerals before extraction. See Arizona Laws 47-9102
- Health-care-insurance receivable: means an interest in or claim under a policy of insurance that is a right to payment of a monetary obligation for health care goods or services provided. See Arizona Laws 47-9102
- including: means not limited to and is not a term of exclusion. See Arizona Laws 1-215
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Payment intangible: means a general intangible under which the account debtor's principal obligation is a monetary obligation. See Arizona Laws 47-9102
- Person: includes a corporation, company, partnership, firm, association or society, as well as a natural person. See Arizona Laws 1-215
- Promissory note: means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay and does not contain an acknowledgment by a bank that the bank has received for deposit a sum of money or funds. See Arizona Laws 47-9102
- Secured party: means :
(a) A person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;
(b) A person that holds an agricultural lien;
(c) A consignor;
(d) A person to which accounts, chattel paper, payment intangibles or promissory notes have been sold;
(e) A trustee, indenture trustee, agent, collateral agent or other representative in whose favor a security interest or agricultural lien is created or provided for; or
(f) A person that holds a security interest arising under section 47-2401, 47-2505, 47-2711, 47-2A508, 47-4210 or 47-5118. See Arizona Laws 47-9102
- Statute: A law passed by a legislature.
1. Would impair the creation, attachment or perfection of a security interest; or
2. 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.
B. Subsection A of this section applies to a security interest in a payment intangible or promissory note only if the security interest arises out of a sale of the payment intangible or promissory note, other than a sale pursuant to a disposition under section 47-9610 or an acceptance of collateral under section 47-9620.
C. A rule of law, statute or regulation that prohibits, restricts or requires the consent of a government, governmental body or official, person obligated on a promissory note or account debtor to the assignment or transfer of, or creation of a security interest in, a promissory note, health-care-insurance receivable or general intangible, including a contract, permit, license or franchise between an account debtor and a debtor, is ineffective to the extent that the rule of law, statute or regulation:
1. Would impair the creation, attachment or perfection of a security interest; or
2. 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.
D. To the extent that 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 general intangible or a rule of law, statute or regulation described in subsection C of this section would be effective under law other than this chapter but is ineffective under subsection A or C of this section, the creation, attachment or perfection of a security interest in the promissory note, health-care-insurance receivable or general intangible:
1. Is not enforceable against the person obligated on the promissory note or the account debtor;
2. Does not impose a duty or obligation on the person obligated on the promissory note or the account debtor;
3. Does not require the person obligated on the promissory note or the account debtor to recognize the security interest, pay or render performance to the secured party or accept payment or performance from the secured party;
4. Does not entitle the secured party to use or assign the debtor’s rights under the promissory note, health-care-insurance receivable or general intangible, including any related information or materials furnished to the debtor in the transaction giving rise to the promissory note, health-care-insurance receivable or general intangible;
5. Does not entitle the secured party to use, assign, possess or have access to any trade secrets or confidential information of the person obligated on the promissory note or the account debtor; and
6. Does not entitle the secured party to enforce the security interest in the promissory note, health-care-insurance receivable or general intangible.
E. This section prevails over any inconsistent provisions in Title 33, Chapter 7.