(810 ILCS 5/9-408) (from Ch. 26, par. 9-408)

Sec. 9-408.

Restrictions on assignment of promissory notes,
health-care-insurance receivables, and certain general intangibles ineffective.

(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 Section 9-610 or an acceptance of collateral under Section 9-620.

(c) Legal restrictions on assignment generally ineffective.  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 Article 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.

(Source: P.A. 97-1034, eff. 7-1-13.)