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Revised Article 9's Assignment Provisions: An Analysis
Part One of a Two-Part Series
Chapter 4 of Revised Article 9, titled “Rights of Third Parties,” deals with several issues affecting the assignment of accounts, leases, and other contract rights. See, in particular, Sections 9-403 to 9-409. These sections replace former Sections 9-206 and 9-318 and part of Section 2A-303. This article summarizes some of the key provisions of Chapter 4 of Revised Article 9, compares these provisions to former Article 9, and describes a few recent cases under this Chapter. Note that different rules apply in a consumer transaction or if the account debtor is an individual who incurred the obligation primarily for personal, family or household purposes; this article does not address these issues. In addition, this article does not address the assignment of a health care insurance receivable.
A threshold issue is to determine the applicable governing law. The law designated by the secured party and the debtor should not necessarily apply to the relationship between the debtor and the account debtor. Revised Article 9 does not answer this question. The issue comes up, for example, in the context of the anti-assignment override provisions contained in Sections 9-406 and 9-408 discussed below. Delaware law provides that these anti-assignment override provisions do not apply to any interest in a limited partnership or limited liability company; accordingly, restrictions on the pledge of a Delaware limited partnership or limited liability company interests are effective. See Del. UCC ”9-406(i)(5) and 9-408(e)(4), Del. RULPA '17-1101(g), and Del. LLCA '18-1101(g). New York did not adopt the anti-assignment override provisions with respect to statutory restrictions contained in Sections 9-406(f) and 9-408(c). See generally Section 9-401, Comment 3.
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The Article 8 Opt In
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Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?
The Benefits of Blockchain for e-Discovery and Data Preservation
As businesses across various industries increasingly adopt blockchain, it will become a critical source of discoverable electronically stored information. The potential benefits of blockchain for e-discovery and data preservation are substantial, making it an area of growing interest and importance.