                                 CODE OF VIRGINIA

RIGHTS ACQUIRED BY ASSIGNEE; CLAIMS AND DEFENSES AGAINST ASSIGNEE (§ 8.9A-404)

a. Assignee&#8217;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), 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
   signed by the assignor or the assignee.

b. Account debtor&#8217;s claim reduces amount owed to assignee. Subject to
subsection (c) and except as otherwise provided in subsection (d), the claim of
an account debtor against an assignor may be asserted against an assignee under
subsection (a) only to reduce the amount the account debtor owes.

c. Rule for individual under other law. This section is subject to law other
than this title 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.

d. Omission of required statement in consumer transaction. In a consumer
transaction, if a record evidences the account debtor&#8217;s obligation, law
other than this title requires that the record include a statement to the effect
that the account debtor&#8217;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.

e. Inapplicability to health-care-insurance receivable. This section does not
apply to an assignment of a health-care-insurance receivable.

HISTORY: 1964, c. 219, § 8.9-318; 1973, c. 509; 2000, c. 1007; 2024, c. 652.