New Jersey § 12a:9-408

§ 12a:9-408.

(a) Term restricting assignment generally ineffective. Except as otherwise provided in subsection (b), 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: (1) would impair the creation, attachment, or perfection of a security interest;

or (2) provides that the assignment or transfer or the 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. (b) Applicability of subsection (a) to sales of certain rights to payment. Subsection (a) 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 12A:9-610 or an acceptance of

collateral under 12A:9-620 . (c) Legal restrictions on assignment generally ineffective. Except as provided in subsection (e), 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: (1) would impair the creation, attachment, or perfection of a security interest;

or (2) provides that the assignment or transfer or the 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. (d) Limitation on ineffectiveness under subsections (a) and (c). 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 (c) would

be effective under law other than this chapter but is ineffective under subsection

(a) or (c), the creation, attachment, or perfection of a security interest in the

promissory note, health-care-insurance receivable, or general intangible: (1) is not enforceable against the person obligated on the promissory note or the

account debtor; (2) does not impose a duty or obligation on the person obligated on the promissory

note or the account debtor; (3) 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; (4) 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; (5) 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 (6) does not entitle the secured party to enforce the security interest in the promissory

note, health-care-insurance receivable, or general intangible. (e) Section prevails over specified inconsistent law. Except to the extent otherwise provided in subsection (f), this section prevails

over any inconsistent provision of an existing or future statute, rule or regulation

of this State, unless the provision is contained in a statute of this State, refers

expressly to this section and states that the provision prevails over this section. (f) Inapplicability. Subsection (c) does not apply to an assignment or transfer of, or the creation,

attachment, perfection or enforcement of a security interest in, a right the transfer

of which is prohibited or restricted by any of the following statutes to the extent

that the statute is inconsistent with subsection (c): R.S.34:15-29 (workers' compensation claims); section 13 of P.L.1970, c. 13 ( C.5:9-13 ) (State lottery winnings); and P.L.2001, c. 139 ( C.2A:16-63 et seq. ) (structured settlement agreements).