41-09-70. (9-408) Restrictions on assignment of promissory notes, health care
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insurance receivables, and certain general intangibles ineffective.
1. Except as otherwise provided in subsections 2 and 6, a term in a promissory note or in
an agreement between an account debtor and a debtor which relates to a health care
insurance receivable or a general intangible, including a contract, permit, license, or
franchise, and which term prohibits, restricts, or requires the consent of the person
obligated on the promissory note or the account debtor to, the assignment or transfer
of, or creation, attachment, or perfection of a security interest in, the promissory note,
health care insurance receivable, or general intangible, is ineffective to the extent that
the term:
a. Would impair the creation, attachment, or perfection of a security interest; or
b. Provides that the assignment, transfer, creation, attachment, or perfection of the
security interest may give rise to a default, breach, right of recoupment, claim,
defense, termination, right of termination, or remedy under the promissory note,
health care insurance receivable, or general intangible.
2. Subsection 1 applies to a security interest in a payment intangible or promissory note
only if the security interest arises out of a sale of the payment intangible or promissory
note, other than a sale pursuant to a disposition under section 41-09-107 or an
acceptance of collateral under section 41-09-115.
3. Except as otherwise provided in subsection 6, a rule of law, statute, or regulation that
prohibits, restricts, or requires the consent of a government, governmental body or
official, person obligated on a promissory note, or account debtor to the assignment or
transfer of, or creation of a security interest in, a promissory note, health care
insurance receivable, or general intangible, including a contract, permit, license, or
franchise between an account debtor and a debtor, is ineffective to the extent that the
rule of law, statute, or regulation:
a. Would impair the creation, attachment, or perfection of a security interest; or
b. Provides that the assignment, transfer, creation, attachment, or perfection of the
security interest may give rise to a default, breach, right of recoupment, claim,
defense, termination, right of termination, or remedy under the promissory note,
health care insurance receivable, or general intangible.
4. To the extent that a term in a promissory note or in an agreement between an account
debtor and a debtor which relates to a health care insurance receivable or general
intangible or a rule of law, statute, or regulation described in subsection 3 would be
effective under law other than this chapter but is ineffective under subsection 1 or 3,
the creation, attachment, or perfection of a security interest in the promissory note,
health care insurance receivable, or general intangible:
a. Is not enforceable against the person obligated on the promissory note or the
account debtor;
b. Does not impose a duty or obligation on the person obligated on the promissory
note or the account debtor;
c. Does not require the person obligated on the promissory note or the account
debtor to recognize the security interest, pay or render performance to the
secured party, or accept payment or performance from the secured party;
d. Does not entitle the secured party to use or assign the debtor's rights under the
promissory note, health care insurance receivable, or general intangible,
including any related information or materials furnished to the debtor in the
transaction giving rise to the promissory note, health care insurance receivable,
or general intangible;
e. Does not entitle the secured party to use, assign, possess, or have access to any
trade secrets or confidential information of the person obligated on the
promissory note or the account debtor; and
f. Does not entitle the secured party to enforce the security interest in the
promissory note, health care insurance receivable, or general intangible. 5. This section prevails over any inconsistent statute, rule, or regulation. 6. This section does not apply to a security interest in an ownership interest in a general
partnership, limited partnership, or limited liability company. 7. In this section, "promissory note" includes a negotiable instrument that evidences
chattel paper.
41-09-71. (9-409) Restrictions on assignment of letter-of-credit rights ineffective. 1. A term in a letter of credit or a rule of law, statute, regulation, custom, or practice
applicable to the letter of credit which prohibits, restricts, or requires the consent of an
applicant, issuer, or nominated person to a beneficiary's assignment of or creation of a
security interest in a letter-of-credit right is ineffective to the extent that the term or rule
of law, statute, regulation, custom, or practice:
a. Would impair the creation, attachment, or perfection of a security interest in the
letter-of-credit right; or
b. Provides that the assignment, creation, attachment, or perfection of the security
interest may give rise to a default, breach, right of recoupment, claim, defense,
termination, right of termination, or remedy under the letter-of-credit right. 2. To the extent that a term in a letter of credit is ineffective under subsection 1 but would
be effective under law other than this chapter or a custom or practice applicable to the
letter of credit, to the transfer of a right to draw or otherwise demand performance
under the letter of credit, or to the assignment of a right to proceeds of the letter of
credit, the creation, attachment, or perfection of a security interest in the letter-of-credit
right:
a. Is not enforceable against the applicant, issuer, nominated person, or transferee
beneficiary;
b. Imposes no duties or obligations on the applicant, issuer, nominated person, or
transferee beneficiary; and
c. Does not require the applicant, issuer, nominated person, or transferee
beneficiary to recognize the security interest, pay or render performance to the
secured party, or accept payment or other performance from the secured party.
41-09-72. (9-501) Filing office. 1. Except as otherwise provided in subsection 2, if the local law of this state governs
perfection of a security interest or agricultural lien, the office in which to file a financing
statement to perfect the security interest or agricultural lien is:
a. The office designated for the filing or recording of a record of a mortgage on the
related real property, if:
(1)The collateral is as-extracted collateral or timber to be cut; or
(2)The financing statement is filed as a fixture filing and the collateral is goods
that are or are to become fixtures; or
b. The office of the recorder in any county in this state or in the office of the
secretary of state, in all other cases, including a case in which the collateral is
goods that are or are to become fixtures and the financing statement is not filed
as a fixture filing. 2. The office in which to file a financing statement to perfect a security interest in
collateral, including fixtures, of a transmitting utility is the office of the secretary of
state. The financing statement also constitutes a fixture filing as to the collateral
indicated in the financing statement which is or is to become fixtures. 3. The secretary of state shall provide an electronic means for filing any record required
or permitted to be filed by this title. This may include use of business-to-business
methods using a common data format and must include a web-based application. Any
record that is not filed electronically must be rejected.