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Illinois Compiled Statutes

810 ILCS 5/9-318 (2026)

No interest retained in right to payment that is sold; rights and title of seller of account or chattel paper with respect to creditors and purchasers

✓ current as of May 2026
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(810 ILCS 5/9-318) (from Ch. 26, par. 9-318)
    Sec. 9-318. No interest retained in right to payment that is sold; rights and title of seller of account or chattel paper with respect to creditors and purchasers.
    (a) Seller retains no interest. A debtor that has sold an account, chattel paper, payment intangible, or promissory note does not retain a legal or equitable interest in the collateral sold.
    (b) Deemed rights of debtor if buyer's security interest unperfected. For purposes of determining the rights of creditors of, and purchasers for value of an account or chattel paper from, a debtor that has sold an account or chattel paper, while the buyer's security interest is unperfected, the debtor is deemed to have rights and title to the account or chattel paper identical to those the debtor sold.
(Source: P.A. 91-893, eff. 7-1-01.)

    
Notes of Decisions
Cited in 8 cases, 1996–2012 · leading case: In Re Doctors Hosp. of Hyde Park, Inc., 272 B.R. 677 (Bankr. N.D. Ill. 2002).
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In Re Doctors Hosp. of Hyde Park, Inc., 272 B.R. 677 (Bankr. N.D. Ill. 2002). · cites it 3× “” See 810 ILCS 5/9-318(1) (West 1993). The version of Section 9-318 in effect at the relevant time provided as follows: (1) Unless an account debtor has made an enforceable agreement not to assert defenses or claims arising out of a sale *685 as provided in Section 9-206 the…”
In Re: Doctors Hosp. of Hyde Park, Inc., Debtor. Appeal Of: Daiwa Special Asset Corp., 337 F.3d 951 (7th Cir. 2003). “” UCC § 9-818(1), 810 ILCS 5/9-318(1). (Effective 2001 — too late to affect this case — section 318 was amended and renumbered, becoming UCC § 9-404, 810 ILCS 5/9-404.”
Bank of Am., N.A. v. Moglia (In Re Outboard Marine Corp.), 278 B.R. 778 (N.D. Ill. 2002). · cites it 2× “10 Next, BofA argues that § 9-318(4) of the Uniform Commercial Code (codified in Illinois as 810 ILCS 5/9-318(4)) 11 renders ineffective the Trust Agreement’s limitation on assignment.”
CNH Capital Am. LLC v. Trainor Grain & Supply Co. (In re Printz), 478 B.R. 876 (Bankr. C.D. Ill. 2012). “810 ILCS 5/9-318(1) (current version at 810 ILCS 5/9-404 (2001)); see In re Doctors Hosp.”
Illinois v. Daiwa Special Asset Corp. (In Re Doctors Hosp. of Hyde Park), 291 B.R. 453 (N.D. Ill. 2002). “Daiwa claims that under § 9-318(1) 4 of the Illinois Commercial Code (“Commercial Code”), 810 ILCS 5/9-318(1) (West 1993), its perfected security interest in the receivables is superior to the State’s setoff interest.”
Sw. Fin. Bank & Trust Co. v. George Hyman Constr. Co., 940 F. Supp. 1331 (N.D. Ill. 1996). · cites it 2× “Section 9-318(2) or 810 ILCS 5/9-318(2) provides: So far as the right to payment or a part thereof under an assigned contract has not been fully earned by performance, and notwithstanding notification of the assignment, any modification of or substitution for the contract made…”
Daiwa Special Asset v. State of Illinois (7th Cir. 2003). “and (b) any other defense or claim of the account debtor against the assignor which accrues before the account debtor re- ceives notification of the assignment.”
Henderson v. Roadway Express (Ill. App. Ct. 1999). “” 810 ILCS 5/9-318(4) (West 1998). However, section 9-104(g) of the Commercial Code expressly excludes from article 9 “a transfer of an interest or claim in or under any policy of insurance, except as provided with respect to proceeds *** and priorities in proceeds.”
— 810 ILCS 5/9-318(1) — 5 cases
In Re: Doctors Hosp. of Hyde Park, Inc., Debtor. Appeal Of: Daiwa Special Asset Corp., 337 F.3d 951 (7th Cir. 2003). “” UCC § 9-818(1), 810 ILCS 5/9-318(1). (Effective 2001 — too late to affect this case — section 318 was amended and renumbered, becoming UCC § 9-404, 810 ILCS 5/9-404.”
In Re Doctors Hosp. of Hyde Park, Inc., 272 B.R. 677 (Bankr. N.D. Ill. 2002). “” See 810 ILCS 5/9-318(1) (West 1993). The version of Section 9-318 in effect at the relevant time provided as follows: (1) Unless an account debtor has made an enforceable agreement not to assert defenses or claims arising out of a sale *685 as provided in Section 9-206 the…”
CNH Capital Am. LLC v. Trainor Grain & Supply Co. (In re Printz), 478 B.R. 876 (Bankr. C.D. Ill. 2012). “810 ILCS 5/9-318(1) (current version at 810 ILCS 5/9-404 (2001)); see In re Doctors Hosp.”
Illinois v. Daiwa Special Asset Corp. (In Re Doctors Hosp. of Hyde Park), 291 B.R. 453 (N.D. Ill. 2002). “Daiwa claims that under § 9-318(1) 4 of the Illinois Commercial Code (“Commercial Code”), 810 ILCS 5/9-318(1) (West 1993), its perfected security interest in the receivables is superior to the State’s setoff interest.”
Daiwa Special Asset v. State of Illinois (7th Cir. 2003). “and (b) any other defense or claim of the account debtor against the assignor which accrues before the account debtor re- ceives notification of the assignment.”
— 810 ILCS 5/9-318(2) — 1 case
Sw. Fin. Bank & Trust Co. v. George Hyman Constr. Co., 940 F. Supp. 1331 (N.D. Ill. 1996). “Section 9-318(2) or 810 ILCS 5/9-318(2) provides: So far as the right to payment or a part thereof under an assigned contract has not been fully earned by performance, and notwithstanding notification of the assignment, any modification of or substitution for the contract made…”
— 810 ILCS 5/9-318(4) — 2 cases
Bank of Am., N.A. v. Moglia (In Re Outboard Marine Corp.), 278 B.R. 778 (N.D. Ill. 2002). “10 Next, BofA argues that § 9-318(4) of the Uniform Commercial Code (codified in Illinois as 810 ILCS 5/9-318(4)) 11 renders ineffective the Trust Agreement’s limitation on assignment.”
Henderson v. Roadway Express (Ill. App. Ct. 1999). “” 810 ILCS 5/9-318(4) (West 1998). However, section 9-104(g) of the Commercial Code expressly excludes from article 9 “a transfer of an interest or claim in or under any policy of insurance, except as provided with respect to proceeds *** and priorities in proceeds.”
— 810 ILCS 5/9-318(l)(a) — 1 case
Sw. Fin. Bank & Trust Co. v. George Hyman Constr. Co., 940 F. Supp. 1331 (N.D. Ill. 1996). “Section 9-318(2) or 810 ILCS 5/9-318(2) provides: So far as the right to payment or a part thereof under an assigned contract has not been fully earned by performance, and notwithstanding notification of the assignment, any modification of or substitution for the contract made…”
— 810 ILCS 5/9-318(l)(b) — 1 case
In Re Doctors Hosp. of Hyde Park, Inc., 272 B.R. 677 (Bankr. N.D. Ill. 2002). “” See 810 ILCS 5/9-318(1) (West 1993). The version of Section 9-318 in effect at the relevant time provided as follows: (1) Unless an account debtor has made an enforceable agreement not to assert defenses or claims arising out of a sale *685 as provided in Section 9-206 the…”
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