Louisiana Revised Statutes 10:9-408 – Restrictions on assignment of promissory notes, health-care-insurance receivables, and certain general intangibles ineffective
Terms Used In Louisiana Revised Statutes 10:9-408
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
- Contract: A legal written agreement that becomes binding when signed.
- 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.
- person: includes a body of persons, whether incorporated or not. See Louisiana Revised Statutes 1:10
- Statute: A law passed by a legislature.
(a) Term restricting assignment generally ineffective. Except as otherwise provided in Subsections (b) and (f) and La. Rev. Stat. 10:9-410, a term in a promissory note or in an agreement between an account debtor and a debtor which 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:
(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) Applicability of Subsection (a) of this Section to sales of certain rights to payment. Subject to Subsection (f) of this Section, 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 La. Rev. Stat. 10:9-610 or an acceptance of collateral under La. Rev. Stat. 10:9-620.
(c) Legal restrictions on assignment generally ineffective. Subject to Subsection (f), a statute, governmental rule 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 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) Limitation on ineffectiveness under Subsections (a) and (c). To the extent that a term in a promissory note or in an agreement between an account debtor and a debtor which relates to a health-care-insurance receivable or general intangible or statute or regulation described in Subsection (c) would be effective under law other than this Chapter but is ineffective under Subsection (a) or (c), 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) Section prevails over specified inconsistent law. This Section prevails over any inconsistent provisions of Civil Code Article 2653.
(f) Inapplicability. This Section does not apply to an assignment of any pension, disability, annuity, retirement or other benefit, distribution or allowance right or payment from any governmental retirement system or pension fund or any other governmental unit, workers’ compensation claims or payments, unemployment compensation benefits, public assistance payments, crime victim reparations, or lottery payments.
(g) Subsections (a) and (c) do not apply to the assignment or transfer or creation of a security interest in:
(1) a claim or right to receive compensation for injuries or sickness as described in 26 U.S.C. § 104(a)(1) or (2), as amended; or
(2) a claim or right to receive benefits under a special needs trust as described in 42 U.S.C. § 1396p(d)(4), as amended.
Acts 1988, No. 528, §1, eff. Jan. 1, 1990; Acts 1989, No. 135, §7, eff. Jan. 1, 1990; Acts 2001, No. 128, §1, eff. July 1, 2001; Acts 2004, No. 303, §2; Acts 2012, No. 450, §1, eff. July 1, 2013.