UCC 9-406 Notice

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Definition

What is it: A UCC 9-406 notice is a communication that informs an account debtor that their payment obligation has been assigned and must be redirected to a third party. It does not automatically grant the sender a legal right to the payment without verification.

What is it used for: It is used to redirect cash flow from a vendor to an assignee, typically in situations involving commercial financing or merchant cash advances.

Coverage

  • Attributes: 5
  • Synonyms: 2
  • Related entities: 0
  • Sources: 1

Identity

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

Attributes

Key Facts
Paying the wrong party without verified legal authority does not satisfy the original payment obligation, and the vendor can still pursue the full amount. [1]
Key Facts
Paying a party that lacks a verified legal right to receive payment does not discharge the debt to the original vendor. [1]
Key Facts
The correct response to a UCC 9-406 notice is to request proof within two to three business days and continue paying the vendor unless that proof is provided. [1]
Key Facts
UCC 9-406(c) grants account debtors the right to request reasonable proof of assignment. [1]
Key Facts
A UCC 9-406 notice does not guarantee that the sender has a legal right to the payment. [1]

Synonyms & Alternate Names

  • Payment redirection notice
  • UCC 9-406(c) notice

Related Entities

Provenance

Sources

  1. https://secondwindconsultants.com/resource/what-happens-if-you-pay-the-wrong-party-after-a-ucc-9-406-notice (UCC 9-406 Notice)

Machine metadata