                                 CODE OF VIRGINIA

DISCHARGE OF ACCOUNT DEBTOR; NOTIFICATION OF ASSIGNMENT; IDENTIFICATION AND
PROOF OF ASSIGNMENT; RESTRICTIONS ON ASSIGNMENT OF ACCOUNTS, CHATTEL PAPER,
PAYMENT INTANGIBLES, AND PROMISSORY NOTES INEFFECTIVE (§ 8.9A-406)

a. Discharge of account debtor; effect of notification. Subject to subsections
(b) through (i) and subsection (m), an account debtor on an account, chattel
paper, or a payment intangible may discharge its obligation by paying the
assignor until, but not after, the account debtor receives a notification,
signed by the assignor or the assignee, that the amount due or to become due has
been assigned and that payment is to be made to the assignee. After receipt of
the notification, the account debtor may discharge its obligation by paying the
assignee and may not discharge the obligation by paying the assignor.

b. When notification ineffective. Subject to subsections (h) and (m),
notification is ineffective under subsection (a):

   1. if it does not reasonably identify the rights assigned;

   2. to the extent that an agreement between an account debtor and a seller of a
   payment intangible limits the account debtor&#8217;s duty to pay a person
   other than the seller and the limitation is effective under law other than
   this title; or

   3. at the option of an account debtor, if the notification notifies the
   account debtor to make less than the full amount of any installment or other
   periodic payment to the assignee, even if:

A. only a portion of the account, chattel paper, or payment intangible has been
assigned to that assignee;

B. a portion has been assigned to another assignee; or

C. the account debtor knows that the assignment to that assignee is limited.

c. Proof of assignment. Subject to subsections (h) and (m), if requested by the
account debtor, an assignee shall seasonably furnish reasonable proof that the
assignment has been made. Unless the assignee complies, the account debtor may
discharge its obligation by paying the assignor, even if the account debtor has
received a notification under subsection (a).

d. Term restricting assignment generally ineffective. In this subsection,
&#8220;promissory note&#8221; includes a negotiable instrument that evidences
chattel paper. Except as otherwise provided in subsection (e) and §§ 8.2A-303
and 8.9A-407, and subject to subsection (h), a term in an agreement between an
account debtor and an assignor or in a promissory note is ineffective to the
extent that it:

   1. prohibits, restricts, or requires the consent of the account debtor or
   person obligated on the promissory note to the assignment or transfer of, or
   the creation, attachment, perfection, or enforcement of a security interest
   in, the account, chattel paper, payment intangible, or promissory note; or

   2. provides that the assignment or transfer or the creation, attachment,
   perfection, or enforcement of the security interest may give rise to a
   default, breach, right of recoupment, claim, defense, termination, right of
   termination, or remedy under the account, chattel paper, payment intangible,
   or promissory note.

e. Inapplicability of subsection (d) to certain sales. Subsection (d) does not
apply to the sale of a payment intangible or promissory note, other than a sale
pursuant to a disposition under &#xA7; 8.9A-610 or an acceptance of collateral
under &#xA7; 8.9A-620.

f. Legal restrictions on assignment generally ineffective. Except as otherwise
provided in §§ 8.2A-303 and 8.9A-407 and subject to subsections (h) and (i), a
rule of law, statute, or regulation that prohibits, restricts, or requires the
consent of a government, governmental body or official, or account debtor to the
assignment or transfer of, or creation of a security interest in, an account or
chattel paper is ineffective to the extent that the rule of law, statute, or
regulation:

   1. prohibits, restricts, or requires the consent of the government,
   governmental body or official, or account debtor to the assignment or transfer
   of, or the creation, attachment, perfection, or enforcement of a security
   interest in the account or chattel paper; or

   2. provides that the assignment or transfer or the creation, attachment,
   perfection, or enforcement of the security interest may give rise to a
   default, breach, right of recoupment, claim, defense, termination, right of
   termination, or remedy under the account or chattel paper.

g. Subsection (b) (3) not waivable. Subject to subsections (h) and (m), an
account debtor may not waive or vary its option under subsection (b) (3).

h. 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.

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

j. Inapplicability of subsection (d) to certain transactions. Subsection (d)
does not apply to:

   1. a claim or right to receive compensation for injuries or sickness as
   described in 26 U.S.C. &#xA7; 104(a) (1), as amended from time to time; or

   2. a claim or right to receive benefits under a special needs trust as
   described in 42 U.S.C. &#xA7; 1396p (d) (4), as amended from time to time.

k. Inapplicability to partnership and limited liability company interests. This
section does not apply to an interest in a partnership or limited liability
company.

l. No inference regarding structured settlements. This section shall not be
construed or interpreted to relieve or exempt any person or entity from any
duties, obligations or rights imposed or provided by the Structured Settlement
Protection Act (&#xA7; 59.1-475 et seq.), as amended from time to time.

m. Subsections (a), (b), (c), and (g) do not apply to a controllable account or
controllable payment intangible.

HISTORY: 1964, c. 219, § 8.9-318; 1973, c. 509; 2000, c. 1007; 2003, c. 340;
2012, c. 155; 2024, c. 652.