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Illinois Compiled Statutes

810 ILCS 5/9-404 (2026)

Rights acquired by assignee; claims and defenses against assignee

✓ current as of May 2026
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(810 ILCS 5/9-404) (from Ch. 26, par. 9-404)
    Sec. 9-404. Rights acquired by assignee; claims and defenses against assignee.
    (a) Assignee's rights subject to terms, claims, and defenses; exceptions. Unless an account debtor has made an enforceable agreement not to assert defenses or claims, and subject to subsections (b) through (e), the rights of an assignee are subject to:
        (1) all terms of the agreement between the account
    
debtor and assignor and any defense or claim in recoupment arising from the transaction that gave rise to the contract; and
        (2) any other defense or claim of the account debtor
    
against the assignor which accrues before the account debtor receives a notification of the assignment signed by the assignor or the assignee.
    (b) Account debtor's claim reduces amount owed to assignee. Subject to subsection (c) and except as otherwise provided in subsection (d), the claim of an account debtor against an assignor may be asserted against an assignee under subsection (a) only to reduce the amount the account debtor owes.
    (c) Rule for individual under other law. This 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.
    (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 account debtor's recovery against an assignee with respect to claims and defenses against the assignor may not exceed amounts paid by the account debtor under the record, and the record does not include such a statement, the extent to which a claim of an account debtor against the assignor may be asserted against an assignee is determined as if the record included such a statement.
    (e) Inapplicability to health-care-insurance receivable. This Section does not apply to an assignment of a health-care-insurance receivable.
(Source: P.A. 103-1036, eff. 1-1-25.)

    
Notes of Decisions
Cited in 7 cases, 2002–2020 · leading case: CNH Capital Am. LLC v. Trainor Grain & Supply Co. (In re Printz), 478 B.R. 876 (Bankr. C.D. Ill. 2012).
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CNH Capital Am. LLC v. Trainor Grain & Supply Co. (In re Printz), 478 B.R. 876 (Bankr. C.D. Ill. 2012). · cites it 3× “810 ILCS 5/9-318(1) (current version at 810 ILCS 5/9-404 (2001)); see In re Doctors Hosp.”
Proin S.A. v. LaSalle Bank, N.A., 223 F. Supp. 2d 960 (N.D. Ill. 2002). “Proin responded with its own counterclaim for violation of Illinois Commercial Code Section 5/9-404(a), which permits an account debtor to make claim against an assignee for recoupment.”
Puritan Fin. v. Bechstein Constr. Corp., 2012 IL App (1st) 112261 (Ill. App. Ct. 2012). “See 810 ILCS 5/9-404(a)(1) (West 2008). Section 9-404(a)(2) allows setoffs based on matters extrinsic to the assigned asset, and, to protect the assignee and debtor alike, it adds the limitation that such matters may amount to setoffs only if they accrue before notice of the…”
Inland Bank & Trust v. LL Flex, LLC (N.D. Ill. 2018). · cites it 3× “§ 25-9-404 (a)-(b); 810 ILCS 5/9-404(a)-(b). Oracle’s affirmative defense alleges that section 9-404 entitles Oracle (the account debtor) to set off the money that Alpha (the assignor) owes Oracle against the sums that Oracle owes to Metallic (Alpha’s assignee) and thus to IBT…”
Inland Bank & Trust v. LL Flex, LLC (N.D. Ill. 2020). · cites it 2× “§ 25-9-404 (a)(1)-(2); see also 810 ILCS 5/9-404(a)(1)-(2). Recoupment defenses are encompassed by § 9-404(a)(1), while set- off defenses fall under § 9-404(a)(2).”
Pounds v. Portfolio Recovery Assocs. (N.C. Ct. App. 2020). “’ ” (citing 810 ILCS 5/9-404(a))). However, as Plaintiffs argue and we have discussed supra, the very terms of the Bills of Sale at issue in the present case contractually limit the scope of the assignments—they assign PRA only Plaintiffs’ Accounts and Receivables.”
Pounds v. Portfolio Recovery Assocs. (N.C. Ct. App. 2020). “’ ” (citing 810 ILCS 5/9-404(a))). However, as Plaintiffs argue and we have discussed supra, the very terms of the Bills of Sale at issue in the present case contractually limit the scope of the assignments—they assign PRA only Plaintiffs’ Accounts and Receivables.”
— 810 ILCS 5/9-404(a) — 5 cases
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.”
Proin S.A. v. LaSalle Bank, N.A., 223 F. Supp. 2d 960 (N.D. Ill. 2002). “Proin responded with its own counterclaim for violation of Illinois Commercial Code Section 5/9-404(a), which permits an account debtor to make claim against an assignee for recoupment.”
Inland Bank & Trust v. LL Flex, LLC (N.D. Ill. 2018). “§ 25-9-404 (a)-(b); 810 ILCS 5/9-404(a)-(b). Oracle’s affirmative defense alleges that section 9-404 entitles Oracle (the account debtor) to set off the money that Alpha (the assignor) owes Oracle against the sums that Oracle owes to Metallic (Alpha’s assignee) and thus to IBT…”
Pounds v. Portfolio Recovery Assocs. (N.C. Ct. App. 2020). “’ ” (citing 810 ILCS 5/9-404(a))). However, as Plaintiffs argue and we have discussed supra, the very terms of the Bills of Sale at issue in the present case contractually limit the scope of the assignments—they assign PRA only Plaintiffs’ Accounts and Receivables.”
Pounds v. Portfolio Recovery Assocs. (N.C. Ct. App. 2020). “’ ” (citing 810 ILCS 5/9-404(a))). However, as Plaintiffs argue and we have discussed supra, the very terms of the Bills of Sale at issue in the present case contractually limit the scope of the assignments—they assign PRA only Plaintiffs’ Accounts and Receivables.”
— 810 ILCS 5/9-404(a)(1) — 2 cases
Puritan Fin. v. Bechstein Constr. Corp., 2012 IL App (1st) 112261 (Ill. App. Ct. 2012). “See 810 ILCS 5/9-404(a)(1) (West 2008). Section 9-404(a)(2) allows setoffs based on matters extrinsic to the assigned asset, and, to protect the assignee and debtor alike, it adds the limitation that such matters may amount to setoffs only if they accrue before notice of the…”
Inland Bank & Trust v. LL Flex, LLC (N.D. Ill. 2020). “§ 25-9-404 (a)(1)-(2); see also 810 ILCS 5/9-404(a)(1)-(2). Recoupment defenses are encompassed by § 9-404(a)(1), while set- off defenses fall under § 9-404(a)(2).”
— 810 ILCS 5/9-404(b) — 1 case
Inland Bank & Trust v. LL Flex, LLC (N.D. Ill. 2020). “§ 25-9-404 (a)(1)-(2); see also 810 ILCS 5/9-404(a)(1)-(2). Recoupment defenses are encompassed by § 9-404(a)(1), while set- off defenses fall under § 9-404(a)(2).”
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