Also known as: notifications of the assignment · notify of the assignment · notice of assignment
Written by attorneys · grounded in primary & secondary sources — see below
A signed communication from an assignor or assignee to an account debtor stating that a right to payment has been transferred. Receipt of the communication cuts off the account debtor's ability to assert against the assignee any defense or claim against the assignor that accrues after the communication arrives.
Nimbus Cloud contracted with Nile Shipping to supply custom parts. Nile discovered defects and demanded a price reduction before any assignment occurred. Nimbus assigned the receivable to Nordic Ventures, which sent Nile a signed notification of the assignment. Nile may assert the defect claim to reduce the amount owed to Nordic Ventures because the claim accrued before Nile received the notification.
Nathaniel Newman leased equipment from Noreen Nguyen under a contract that required timely maintenance. Noreen assigned the rent payments to Northstar Logistics and sent Nathaniel a signed notification of the assignment. Nathaniel later discovered maintenance failures and tried to negotiate a rent reduction directly with Noreen. The reduction agreement does not bind Northstar Logistics because it was reached after Nathaniel received the notification.
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A defense or claim accrues when the facts giving rise to it come into existence. If those facts exist before the account debtor receives a signed notification of the assignment, the account debtor may assert the defense or claim to reduce what it owes the assignee.
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No. The statute requires a notification signed by the assignor or the assignee. An unsigned communication fails to trigger the cutoff, so the account debtor may continue to assert defenses and claims that accrue before a proper signed notification arrives.
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Generally no. Once the account debtor receives a signed notification of the assignment, the assignee takes free of any defense or claim against the assignor that accrues afterward, unless the parties have agreed otherwise or a statute provides a different rule.
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No. A claim against the assignor may be asserted against the assignee only to reduce the amount the account debtor owes. The account debtor cannot obtain an affirmative judgment against the assignee for any excess.
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