(a) Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subsections (b) to (e), inclusive, 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.

(b) 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) This 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.

(d) 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.

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

(1959, P.A. 133, S. 9-404; 1969, P.A. 67; 1971, P.A. 218, S. 2; P.A. 73-240, S. 2, 4; P.A. 76-229, S. 2, 6; 76-369, S. 31; P.A. 80-419, S. 6; P.A. 89-251, S. 184, 203; May Sp. Sess. P.A. 92-6, S. 111, 117; P.A. 01-132, S. 66.)

History: 1969 act added exception re $3 fee for statements not on termination form issued by secretary of the state in Subsec. (3); 1971 act added provision in Subsec. (3) prohibiting charge when termination statements filed by state officials; P.A. 73-240 prohibited charge when termination statements filed by municipal officers in Subsec. (3); P.A. 76-229 raised fee for nonstandard form from $3 to $5 in Subsec. (1) but amendment was not enacted; P.A. 76-369 added provisions in Subsec. (1) re financing statements covering consumer goods and specified that termination statement must be filed with each filing officer who received the financing statement, instituted new method for filing officer's procedure upon receipt of termination statement in Subsec. (2), replacing requirement that officer “remove from the files, mark ‘terminated’ and send or deliver to the secured party the financing statement and any continuation statement, statement of assignment or statement of release pertaining thereto” and rephrased Subsec. (3) and imposed additional $1 fee for indexing extra names; P.A. 80-419 raised fee for statements in standard form from $1 to $2 and for those in nonstandard form from $3 to $4; P.A. 89-251 increased the fees in Subsec. (3); May Sp. Sess. P.A. 92-6 amended Subsec. (2) to add that each debtor name to be indexed shall be set forth on the termination statement and deleted Subsec. (3) concerning fees if the termination statement is in the standard form; P.A. 01-132 replaced former provisions re termination statement with provisions re rights acquired by an assignee and claims and defenses of an account debtor asserted against an assignee.

Annotations to former section 42a-9-318:

Waiver of defense clause in consumer goods transaction void as against public policy. 158 C. 543.

Cited. 6 Conn. Cir. Ct. 542.