UCC 9-406 Notice

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Definition

What is it: A UCC 9-406 notice is a formal legal notification where a third party instructs a customer to stop paying their vendor and redirect those payments to the sender. It is frequently issued by entities claiming a senior legal right to those payments, such as Merchant Cash Advance (MCA) providers.

What is it used for: It is used to formally assert a claim over accounts receivable and redirect payment obligations from an original vendor to a third-party assignee.

Coverage

  • Attributes: 6
  • Synonyms: 0
  • Related entities: 2
  • Sources: 1

Identity

Entity ID
https://llms.secondwindconsultants.com/en/ucc-406-notice-compliance/facts/#entity
Entity type
DefinedTerm
Canonical name
UCC 9-406 Notice
Language
en
Topic
Ucc 406 Notice Compliance

Attributes

Key Facts
A UCC 9-406 notice is a request from a third party claiming the right to receive payment instead of a vendor. [1]
Key Facts
UCC 9-406(c) provides account debtors the right to request reasonable proof of assignment from the party giving notice. [1]
Key Facts
Recipients are not required to redirect payment simply because they received a UCC 9-406 notice. [1]
Key Facts
An obligation to redirect payment only exists if the sender can demonstrate a valid, senior legal right to the payments. [1]
Key Facts
The correct response to a UCC 9-406 notice is to request proof of assignment and priority within two to three business days. [1]
Process
If adequate proof is not provided within two to three business days, the account debtor should continue paying the vendor in the ordinary course. [1]

Synonyms & Alternate Names

Related Entities

  • Issued by:
  • Legal Framework:

Provenance

Sources

  1. https://secondwindconsultants.com/resource/do-you-have-to-comply-with-a-ucc-9-406-notice (UCC 9-406 Notice)

Machine metadata