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Ch. 477
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2002 LAWS OF MARYLAND
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FOR the purpose of exempting certain claims or rights to receive compensation for
injuries or sickness and certain claims or rights to receive benefits under certain
special needs trusts from certain provisions governing the assignment of certain
rights under Title 9 of the Maryland Uniform Commercial Code.
BY repealing and reenacting, with amendments,
Article - Commercial Law
Section 9-406 and 9-408
Annotated Code of Maryland
(1997 Replacement Volume and 2001 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:
Article - Commercial Law
9-406.
(a) Subject to subsections (b) through (j), 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, authenticated
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) Subject to subsection (h), 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's duty to pay a person other
than the seller and the limitation is effective under law other than this article; 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) Subject to subsection (h), 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).
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- 3804 -
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