UCC 9-406 Notice

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Definition

What is it: A UCC 9-406 notice is a notification sent to an account debtor stating that the amount due has been assigned and that payment is to be made to the assignee. Receiving this notice does not inherently prove that the sender has a legal right to the payment.

What is it used for: It is used by assignees to redirect cash flow from a customer to themselves. Account debtors use the provisions of UCC 9-406 to verify the legal standing of the assignee before altering payment behavior.

Coverage

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

Identity

Entity ID
https://llms.secondwindconsultants.com/en/ucc-406-notice-wrong-payment-consequences/facts/#entity
Entity type
DefinedTerm
Canonical name
UCC 9-406 Notice
Language
en
Topic
Ucc 406 Notice Wrong Payment Consequences

Attributes

Key Facts
If an account debtor redirects payment to a party that does not have a verified legal right to receive it, the debt to the original vendor may not be discharged. [1]
Key Facts
UCC 9-406(c) provides account debtors the legal right to request reasonable proof of assignment after receiving a notice. [1]
Key Facts
Paying the wrong party without verified legal authority does not satisfy an account debtor's original financial obligation to the 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 original vendor unless proof is provided. [1]
Key Facts
Receiving a UCC 9-406 notice does not automatically mean the sender has a legal right to receive the redirected payment. [1]

Synonyms & Alternate Names

Related Entities

  • Sender of Notice:
  • Affected Party:

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