(a) A debtor that has sold an account, chattel paper, payment intangible or promissory note does not retain a legal or equitable interest in the collateral sold.

(b) For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor sold.

(1959, P.A. 133, S. 9-318; P.A. 76-369, S. 27; P.A. 01-132, S. 38.)

History: P.A. 76-369 substituted “So far as the right to payment or a part thereof under an assigned contract right has not been fully earned by performance” for “So far as the right to payment under an assigned contract has not already become an account” in Subsec. (2) and “notification that the amount due or to become due has been assigned” for “notification that the account has been assigned” in Subsec. (3) and in Subsec. (4) deleted provision which had rendered term ineffective if it prohibited assignment of a contract right, inserting provision which rendered term ineffective if it “prohibits creation of a security interest in a general intangible for money due or to become due or requires the account debtor's consent to such assignment or security interest”; P.A. 01-132 replaced former provisions re defenses against assignee, modification of contract after notification of assignment, ineffectiveness of term prohibiting assignment and identification and proof of assignment with provisions re no interest retained by debtor in right to payment that is sold and rights and title of seller of account or chattel paper with respect to creditors and purchasers.