Rights Acquired by Assignee; Claims and Defenses Against Assignee

  1. Law
  2. Georgia Code
  3. Commercial Code
  4. Secured Transactions
  5. Rights of Third Parties
  6. Rights Acquired by Assignee; Claims and Defenses Against Assignee

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  1. Assignee's rights subject to terms, claims, and defenses; exceptions. Unless an account debtor has made an enforceable agreement not to assert defenses or claims and subject to subsections (b) through (e) of this Code section, the rights of an assignee are subject to:
    1. 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
    2. Any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives a notification of the assignment authenticated by the assignor or the assignee.
  2. Account debtor's claim reduces amount owed to assignee. Subject to subsection (c) of this Code section and except as otherwise provided in subsection (d) of this Code section, the claim of an account debtor against an assignor may be asserted against an assignee under subsection (a) of this Code section only to reduce the amount the account debtor owes.
  3. Rule for individual under other law. This Code 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. Omission of required statement in consumer transaction. In a consumer transaction, if a record evidences the account debtor's obligation, law other than this article 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. Inapplicability to health care insurance receivable. This Code section does not apply to an assignment of a health care insurance receivable.

(Code 1981, §11-9-404, enacted by Ga. L. 2001, p. 362, § 1.)

Law reviews.

- For article, "The Good Faith Purchase Idea and the Uniform Commercial Code," see 15 Ga. L. Rev. 605 (1981).

JUDICIAL DECISIONS

Notice of assignment sufficient.

- Under former O.C.G.A. § 11-9-318(3), appellee assignee's notice to appellant county that a third party providing custodial services to appellant had assigned its invoice payments to appellee was sufficient to inform appellant that it was required to make invoice payments to appellee and any further payments made to the third party were made at appellant's peril. Fulton County v. Am. Factors of Nashville, Inc., 250 Ga. App. 366, 551 S.E.2d 781 (2001).

RESEARCH REFERENCES

Am. Jur. 2d.

- 68A Am. Jur. 2d, Secured Transactions, §§ 39-53, 539-554, 796-800.

C.J.S.

- 6A C.J.S., Assignments, §§ 65, 66, 99. 72 C.J.S., Pledges, § 41.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 9-404.

ALR.

- Payment of judgment by debtor without notice of its assignment, 32 A.L.R. 1021.

Waiver or estoppel with respect to debtor's assertion, as to setoff or counterclaim against assignee, of claim valid as against assignor, 51 A.L.R.2d 886.


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