O.C.G.A.
O.C.G.A.

O.C.G.A. § 11-9-403 (2019)

Agreement not to assert defenses against assignee

✓ O.C.G.A. — 2019 edition (Public.Resource.Org Release 73)
Code text and O.C.G.A. statutory annotations on this page reflect the 2019 Official Code of Georgia Annotated (Public.Resource.Org Release 73, 2019-08-21; public domain per Georgia v. Public.Resource.Org, 2020). The Syfert case-law annotations in Notes of Decisions, below, are current.
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(a) “Value.” As used in this Code section, the term “value” has the meaning provided in subsection (a) of Code Section 11-3-303. (b) Agreement not to assert claim or defense. Except as otherwise provided in this Code section, an agreement between an account debtor and an assignor not to assert against an assignee any claim or defense that the account debtor may have against the assignor is enforceable by an assignee that takes an assignment: (1) For value; (2) In good faith; (3) Without notice of a claim of a property or possessory right to the property assigned; and (4) Without notice of a defense or claim in recoupment of the type

that may be asserted against a person entitled to enforce a negotiable instrument under subsection (a) of Code Section 11-3-305. (c) When subsection (b) of this Code section not applicable. Subsection (b) of this Code section does not apply to defenses of a type that may be asserted against a holder in due course of a negotiable instrument under subsection (b) of Code Section 11-3-305. (d) Omission of required statement in consumer transaction. In a consumer transaction, if a record evidences the account debtor’s obligation, law other than this article requires that the record include a statement to the effect that the rights of an assignee are subject to claims or defenses that the account debtor could assert against the original obligee, and the record does not include such a statement: (1) The record has the same effect as if the record included such a statement; and (2) The account debtor may assert against an assignee those claims and defenses that would have been available if the record included such a statement. (e) Rule for individual under other law. This Code section is subject to law other than this article which establishes a different rule for an account debtor who is an individual and who incurred the obligation primarily for personal, family, or household purposes. (f) Other law not displaced. Except as otherwise provided in subsection (d) of this Code section, this Code section does not displace law other than this article which gives effect to an agreement by an account debtor not to assert a claim or defense against an assignee.

History

Code 1981, § 11-9-403, enacted by Ga. L. 2001, p. 362, § 1.

Annotations

Law reviews. For comment on Geiger Fin. Co. v. Graham, 123 Ga. App. 771, 182 S.E.2d 521 (1971), see 8 Ga. St. B.J. 400 (1972). For note analyzing consumer protection in retail installment contracts with reference to waiver of defenses by purchaser and the denial of holder in due course status to assignee of contract, in light of

Geiger Fin. Co. v. Graham, 123 Ga. App. 771, 182 S.E.2d 521 (1971), see 23 Mercer L. Rev. 673 (1972). For article supporting the retention of waiver of defense clauses in credit card agreements, see 10 Ga. St. B.J. 17 (1973). For article discussing the implied warranty of fitness for a particular purpose, see 9 Ga. L. Rev. 149 (1974). For article, “The Good Faith Purchase Idea and the Uniform Commercial Code,” see 15 Ga. L. Rev. 605 (1981).

JUDICIAL DECISIONS Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Article 9 are included in the annotations for this Code section.

For a table of comparable provisions, see the table at the beginning of the Article. Applicability of section. - Former Section 11-9-206 is applicable to all trans-

actions unless there is a different provision for consumer goods. Massey-Ferguson Credit Corp. v. Wiley, 655 F. Supp. 655, 1987 U.S. Dist. LEXIS 2149 (M.D. Ga. 1987) (decided under former Code Section 11-9-206). Assignment of security interest. - Former Section 11-9-206 created holder in due course status for an assignee who takes a security agreement with a “waiver of defenses” clause even if the security agreement is assigned in the absence of the assignment of an Article III negotiable instrument in the same transaction. Massey-Ferguson Credit Corp. v. Wiley, 655 F. Supp. 655, 1987 U.S. Dist. LEXIS 2149 (M.D. Ga. 1987) (decided under former Code Section 11-9-206). Breach of warranty. - Claim for breach of warranty is assertable only against the manufacturer and not against an assignee. Harrison v. Massey-Ferguson Credit Corp., 168 Ga. App. 788, 310 S.E.2d 544, 1983 Ga. App. LEXIS 2922 (1983) (decided under former Code Section 11-9206). Sale-lease back agreements. - Fact that sale-lease back agreement was not a secured transaction did not preclude ap-

plication of the former provisions of this section. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140, 1981 U.S. App. LEXIS 13681 (5th Cir. 1981) (decided under former Code Section 11-9-206). Common law governs waiver of defense clauses in leases. - Georgia’s version of § 9-206 (former § 11-9-206, see now § 11-9-406) of Uniform Commercial Code does not include phrases “or lessee(s)” and “or lessor” because Georgia did not adopt 1962 revision of Uniform Commercial Code which extended § 9-206 (former § 11-9-206, see now § 11-9-406) to leases; thus, in Georgia, common law rather than § 9-206 (former § 11-9-206, see now § 11-9-406) governs effect of waiver of defense clauses in leases. United Counties Trust Co. v. Mac Lum, Inc., 643 F.2d 1140, 1981 U.S. App. LEXIS 13681 (5th Cir. 1981) (decided under former Code Section 11-9-206). Party-to-the-transaction rule. - For a discussion of the party-to-the-transaction rule as a defense to the holder in due course status, see Design Eng’g, Constr. Int’l, Inc. v. Cessna Fin. Corp., 164 Ga. App. 159, 296 S.E.2d 195, 1982 Ga. App. LEXIS 2739 (1982) (decided under former Code Section 11-9-206).

RESEARCH REFERENCES Am. Jur. 2d. 68A Am. Jur. 2d, Secured Transactions, §§ 13, 14, 65-67, 106, 110-112, 145, 192 et seq., 282-284, 514, 538 et seq. U.L.A. Uniform Commercial Code (U.L.A.) § 9403.

ALR. Validity, in contract for installment sale of consumer goods, or commercial paper given in connection therewith, of provision waiving, as against assignee, defenses good against seller, 39 A.L.R.3d 518.

Notes of Decisions
Cited in 12 cases, 1989–2015 · leading case: Kubota Tractor Corp. v. Citizens & S. Nat'l Bank, 403 S.E.2d 218 (Ga. Ct. App. 1991).
Sort: Relevance Newest Treatment
Kubota Tractor Corp. v. Citizens & S. Nat'l Bank, 403 S.E.2d 218 (Ga. Ct. App. 1991). · cites it 6× “§ 109A-9-403 (2) (OCGA § 11-9-403 (2)), in effect at the time of the execution of Kubota’s security agreement and on the date of its lapse, provided that, with exceptions not here applicable, “a filed financing statement is effective for a period of five years from the date of…”
Giddens v. Pioneer Credit (In re Giddens), 205 B.R. 349 (Bankr. M.D. Ga. 1997). · cites it 10× “5 In addition, O.C.G.A. § 11-9-403(2) provides that “a filed financing statement is effective for a period of five years from the *352 date of filing or until the twentieth day following any maturity date specified in the financing statement, whichever is earlier.”
Jones v. Small Bus. Admin. (In Re Cohutta Mills, Inc.), 108 B.R. 815 (N.D. Ga. 1989). · cites it 3× “8 Arguably, SBA’s continuation statement in the name of King’s Tuft was valid because the statement met the core requirements of § 11-9-403: the financing statement, as discussed, was effective to perfect SBA’s security interest in collateral owned and acquired by Cohutta Mills…”
Rainbow Mfg. Co. v. Bank of Fitzgerald (In Re Rainbow Mfg. Co.), 129 B.R. 702 (Bankr. M.D. Ga. 1991). · cites it 6× “O.C.G.A. § 11-9-403(2) and (3) (amended July 1, 1985).”
Goger v. Merchants Bank of Atlanta (In re Feifer Indus., Inc.), 155 B.R. 256 (D. Ga. 1993). · cites it 4× “” O.C.G.A. § 11-9-403(1). Under the subject security agreement, both First Union and Standard were granted a security interest in debtor’s personal property.”
Bartolan, Inc. v. Columbian Peanut Co., Inc., 727 F. Supp. 1444 (M.D. Ga. 1989). · cites it 6× “” O.C.G.A. § 11-9-403(1) (Supp.1989). The plaintiffs did all they needed to do to file their financing statements and thus perfect security interests in the crops purchased by Columbian from Nidrah.”
Gray Murray v. U.S. Bank Trust Nat'l Assoc., 365 F.3d 1284 (11th Cir. 2004). “O.C.G.A. § 11-9-403(2). Under Georgia law, once a security interest has been perfected, it must be maintained by the filing of a UCC-3 continuation statement, within six months prior to the expiration of the five year period beginning on the date the original financing statement…”
Coats Am., Inc. v. Summit Nat'l Bank, 211 B.R. 771 (N.D. Ga. 1997). · cites it 19× “Coats makes various assertions regarding the purpose behind subsection (8) and the intent of the Georgia General Assembly in adding subsection (8) to O.C.G.A. § 11-9-403. However, Coats cites no legislative history in support of its assertions.”
Rainbow Mfg. Co. v. Bank of Fitzgerald (In Re Rainbow Mfg. Co.), 150 B.R. 857 (M.D. Ga. 1993). · cites it 14× “This uproar resulted in the 1986 General Assembly further amending § 11-9-403. These 1986 amendments became effective March 26 of that year.”
Goodin v. South Atl. Prod. Credit Ass'n, 410 S.E.2d 159 (Ga. Ct. App. 1991). · cites it 2× “In 1987, pursuant to OCGA § 11-9-403 (3), appellee filed a timely continuation statement.”
The Four Cnty. Bank v. Tidewater Equip. Co., 771 S.E.2d 437 (Ga. Ct. App. 2015). · cites it 6× “before lapse,’ ” quoting former OCGA § 11-9-403 (2)); see also Thermal Supply v.”
Randolph Cnty. v. Settles Bros., 577 S.E.2d 1 (Ga. Ct. App. 2002). · cites it 2× “Former OCGA § 11-9-403 (2) (currently OCGA § 11-9-515).”
— 11-9-403(1) — 2 cases
Goger v. Merchants Bank of Atlanta (In re Feifer Indus., Inc.), 155 B.R. 256 (D. Ga. 1993). “” O.C.G.A. § 11-9-403(1). Under the subject security agreement, both First Union and Standard were granted a security interest in debtor’s personal property.”
Bartolan, Inc. v. Columbian Peanut Co., Inc., 727 F. Supp. 1444 (M.D. Ga. 1989). “” O.C.G.A. § 11-9-403(1) (Supp.1989). The plaintiffs did all they needed to do to file their financing statements and thus perfect security interests in the crops purchased by Columbian from Nidrah.”
— 11-9-403(2) — 4 cases
Rainbow Mfg. Co. v. Bank of Fitzgerald (In Re Rainbow Mfg. Co.), 129 B.R. 702 (Bankr. M.D. Ga. 1991). “O.C.G.A. § 11-9-403(2) and (3) (amended July 1, 1985).”
Giddens v. Pioneer Credit (In re Giddens), 205 B.R. 349 (Bankr. M.D. Ga. 1997). “5 In addition, O.C.G.A. § 11-9-403(2) provides that “a filed financing statement is effective for a period of five years from the *352 date of filing or until the twentieth day following any maturity date specified in the financing statement, whichever is earlier.”
Gray Murray v. U.S. Bank Trust Nat'l Assoc., 365 F.3d 1284 (11th Cir. 2004). “O.C.G.A. § 11-9-403(2). Under Georgia law, once a security interest has been perfected, it must be maintained by the filing of a UCC-3 continuation statement, within six months prior to the expiration of the five year period beginning on the date the original financing statement…”
Jones v. Small Bus. Admin. (In Re Cohutta Mills, Inc.), 108 B.R. 815 (N.D. Ga. 1989). “8 Arguably, SBA’s continuation statement in the name of King’s Tuft was valid because the statement met the core requirements of § 11-9-403: the financing statement, as discussed, was effective to perfect SBA’s security interest in collateral owned and acquired by Cohutta Mills…”
— 11-9-403(3) — 4 cases
Giddens v. Pioneer Credit (In re Giddens), 205 B.R. 349 (Bankr. M.D. Ga. 1997). “5 In addition, O.C.G.A. § 11-9-403(2) provides that “a filed financing statement is effective for a period of five years from the *352 date of filing or until the twentieth day following any maturity date specified in the financing statement, whichever is earlier.”
Jones v. Small Bus. Admin. (In Re Cohutta Mills, Inc.), 108 B.R. 815 (N.D. Ga. 1989). “8 Arguably, SBA’s continuation statement in the name of King’s Tuft was valid because the statement met the core requirements of § 11-9-403: the financing statement, as discussed, was effective to perfect SBA’s security interest in collateral owned and acquired by Cohutta Mills…”
Coats Am., Inc. v. Summit Nat'l Bank, 211 B.R. 771 (N.D. Ga. 1997). “Coats makes various assertions regarding the purpose behind subsection (8) and the intent of the Georgia General Assembly in adding subsection (8) to O.C.G.A. § 11-9-403. However, Coats cites no legislative history in support of its assertions.”
Rainbow Mfg. Co. v. Bank of Fitzgerald (In Re Rainbow Mfg. Co.), 150 B.R. 857 (M.D. Ga. 1993). “This uproar resulted in the 1986 General Assembly further amending § 11-9-403. These 1986 amendments became effective March 26 of that year.”
— 11-9-403(8) — 2 cases
Rainbow Mfg. Co. v. Bank of Fitzgerald (In Re Rainbow Mfg. Co.), 150 B.R. 857 (M.D. Ga. 1993). “This uproar resulted in the 1986 General Assembly further amending § 11-9-403. These 1986 amendments became effective March 26 of that year.”
Coats Am., Inc. v. Summit Nat'l Bank, 211 B.R. 771 (N.D. Ga. 1997). “Coats makes various assertions regarding the purpose behind subsection (8) and the intent of the Georgia General Assembly in adding subsection (8) to O.C.G.A. § 11-9-403. However, Coats cites no legislative history in support of its assertions.”
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.