AB111,112,14 13(5) Inapplicability to health care insurance receivable. This section does not
14apply to an assignment of a health care insurance receivable.
AB111,112,20 15409.405 Modification of assigned contract. (1) Effect of modification on
16assignee.
A modification of or substitution for an assigned contract is effective
17against an assignee if made in good faith. The assignee acquires corresponding
18rights under the modified or substituted contract. The assignment may provide that
19the modification or substitution is a breach of contract by the assignor. This
20subsection is subject to subs. (2) to (4).
AB111,112,21 21(2) Applicability of sub. (1). Subsection (1) applies to the extent that:
AB111,112,2322 (a) The right to payment or a part thereof under an assigned contract has not
23been fully earned by performance; or
AB111,113,3
1(b) The right to payment or a part thereof has been fully earned by performance
2and the account debtor has not received notification of the assignment under s.
3409.406 (1).
AB111,113,7 4(3) Rule for individual under other law. This section is subject to law other
5than this chapter which establishes a different rule for an account debtor who is an
6individual and who incurred the obligation primarily for personal, family, or
7household purposes.
AB111,113,9 8(4) Inapplicability to health care insurance receivable. This section does not
9apply to an assignment of a health care insurance receivable.
AB111,113,20 10409.406 Discharge of account debtor; notification of assignment;
11identification and proof of assignment; restrictions on assignment of
12accounts, chattel paper, payment intangibles, and promissory notes
13ineffective. (1)
Discharge of account debtor; effect of notification. Subject to
14subs. (2) to (9), an account debtor on an account, chattel paper, or a payment
15intangible may discharge its obligation by paying the assignor until, but not after,
16the account debtor receives a notification, authenticated by the assignor or the
17assignee, that the amount due or to become due has been assigned and that payment
18is to be made to the assignee. After receipt of the notification, the account debtor may
19discharge its obligation by paying the assignee and may not discharge the obligation
20by paying the assignor.
AB111,113,22 21(2) When notification ineffective. Subject to sub. (8), notification is
22ineffective under sub. (1):
AB111,113,2323 (a) If it does not reasonably identify the rights assigned;
AB111,114,3
1(b) To the extent that an agreement between an account debtor and a seller of
2a payment intangible limits the account debtor's duty to pay a person other than the
3seller and the limitation is effective under law other than this chapter; or
AB111,114,64 (c) At the option of an account debtor, if the notification notifies the account
5debtor to make less than the full amount of any installment or other periodic
6payment to the assignee, even if:
AB111,114,87 1. Only a portion of the account, chattel paper, or payment intangible has been
8assigned to that assignee;
AB111,114,99 2. A portion has been assigned to another assignee; or
AB111,114,1010 3. The account debtor knows that the assignment to that assignee is limited.
AB111,114,15 11(3) Proof of assignment. Subject to sub. (8), if requested by the account debtor,
12an assignee shall seasonably furnish reasonable proof that the assignment has been
13made. Unless the assignee complies, the account debtor may discharge its obligation
14by paying the assignor, even if the account debtor has received a notification under
15sub. (1).
AB111,114,19 16(4) Term restricting assignment generally ineffective. Except as otherwise
17provided in sub. (5) and ss. 409.407 and 411.303, and subject to sub. (8), a term in an
18agreement between an account debtor and an assignor or in a promissory note is
19ineffective to the extent that it:
AB111,114,2320 (a) Prohibits, restricts, or requires the consent of the account debtor or person
21obligated on the promissory note to the assignment or transfer of, or the creation,
22attachment, perfection, or enforcement of a security interest in, the account, chattel
23paper, payment intangible, or promissory note; or
AB111,115,224 (b) Provides that the assignment or transfer or the creation, attachment,
25perfection, or enforcement of the security interest may give rise to a default, breach,

1right of recoupment, claim, defense, termination, right of termination, or remedy
2under the account, chattel paper, payment intangible, or promissory note.
AB111,115,4 3(5) Inapplicability of sub. (4) to certain sales. Subsection (4) does not apply
4to the sale of a payment intangible or promissory note.
AB111,115,10 5(6) Legal restrictions on assignment generally ineffective. Except as
6otherwise provided in ss. 108.13, 409.407, 411.303, and 565.30 and subject to subs.
7(8) and (9), a rule of law, statute, or rule that prohibits, restricts, or requires the
8consent of a government, governmental body or official, or account debtor to the
9assignment or transfer of, or creation of a security interest in, an account or chattel
10paper is ineffective to the extent that the rule of law, statute, or rule:
AB111,115,1411 (a) Prohibits, restricts, or requires the consent of the government,
12governmental body or official, or account debtor to the assignment or transfer of, or
13the creation, attachment, perfection, or enforcement of a security interest in, the
14account or chattel paper; or
AB111,115,1815 (b) Provides that the assignment or transfer or the creation, attachment,
16perfection, or enforcement of the security interest may give rise to a default, breach,
17right of recoupment, claim, defense, termination, right of termination, or remedy
18under the account or chattel paper.
AB111,115,20 19(7) Subsection (2) (c) not waivable. Subject to sub. (8), an account debtor may
20not waive or vary its option under sub. (2) (c).
AB111,115,24 21(8) Rule for individual under other law. This section is subject to law other
22than this chapter which establishes a different rule for an account debtor who is an
23individual and who incurred the obligation primarily for personal, family, or
24household purposes.
AB111,116,2
1(9) Inapplicability to health-care-insurance receivable. This section does
2not apply to an assignment of a health-care-insurance receivable.
AB111,116,6 3409.407 Restrictions on creation or enforcement of security interest in
4leasehold interest or in leasor's residual interest. (1)
Term restricting
5assignment generally ineffective.
Except as otherwise provided in sub. (2), a term
6in a lease agreement is ineffective to the extent that it:
AB111,116,107 (a) Prohibits, restricts, or requires the consent of a party to the lease to the
8assignment or transfer of, or the creation, attachment, perfection, or enforcement of
9a security interest in, an interest of a party under the lease contract or in the lessor's
10residual interest in the goods; or
AB111,116,1411 (b) Provides that the assignment or transfer or the creation, attachment,
12perfection, or enforcement of the security interest may give rise to a default, breach,
13right of recoupment, claim, defense, termination, right of termination, or remedy
14under the lease.
AB111,116,16 15(2) Effectiveness of certain terms. Except as otherwise provided in s. 411.303
16(7), a term described in sub. (1) (b) is effective to the extent that there is:
AB111,116,1817 (a) A transfer by the lessee of the lessee's right of possession or use of the goods
18in violation of the term; or
AB111,116,2019 (b) A delegation of a material performance of either party to the lease contract
20in violation of the term.
AB111,117,3 21(3) Security interest not material impairment. The creation, attachment,
22perfection, or enforcement of a security interest in the lessor's interest under the
23lease contract or the lessor's residual interest in the goods is not a transfer that
24materially impairs the lessee's prospect of obtaining return performance or
25materially changes the duty of or materially increases the burden or risk imposed

1on the lessee within the purview of s. 411.303 (4) unless, and then only to the extent
2that, enforcement actually results in a delegation of material performance of the
3lessor.
AB111,117,14 4409.408 Restrictions on assignment of promissory notes,
5health-care-insurance receivables, and certain general intangibles
6ineffective. (1)
Term restricting assignment generally ineffective. Except as
7otherwise provided in sub. (2), a term in a promissory note or in an agreement
8between an account debtor and a debtor which relates to a health-care-insurance
9receivable or a general intangible, including a contract, permit, license, or franchise,
10and which term prohibits, restricts, or requires the consent of the person obligated
11on the promissory note or the account debtor to, the assignment or transfer of, or
12creation, attachment, or perfection of a security interest in, the promissory note,
13health-care-insurance receivable, or general intangible, is ineffective to the extent
14that the term:
AB111,117,1615 (a) Would impair the creation, attachment, or perfection of a security interest;
16or
AB111,117,2017 (b) Provides that the assignment or transfer or the creation, attachment, or
18perfection of the security interest may give rise to a default, breach, right of
19recoupment, claim, defense, termination, right of termination, or remedy under the
20promissory note, health-care-insurance receivable, or general intangible.
AB111,117,23 21(2) Applicability of sub. (1) to sales of certain rights to payment. Subsection
22(1) applies to a security interest in a payment intangible or promissory note only if
23the security interest arises out of a sale of the payment intangible or promissory note.
AB111,118,5 24(3) Legal restrictions on assignment generally ineffective. A rule of law,
25statute, or rule that prohibits, restricts, or requires the consent of a government,

1governmental body or official, person obligated on a promissory note or account
2debtor to the assignment or transfer of, or creation of a security interest in, a
3promissory note, health-care-insurance receivable, or general intangible, including
4a contract, permit, license, or franchise between an account debtor and a debtor, is
5ineffective to the extent that the rule of law, statute, or rule:
AB111,118,76 (a) Would impair the creation, attachment, or perfection of a security interest;
7or
AB111,118,118 (b) Provides that the assignment or transfer or the creation, attachment, or
9perfection of the security interest may give rise to a default, breach, right of
10recoupment, claim, defense, termination, right of termination, or remedy under the
11promissory note, health-care-insurance receivable, or general intangible.
AB111,118,18 12(4) Limitation on ineffectiveness under subs. (1) and (3). To the extent that a
13term in a promissory note or in an agreement between an account debtor and a debtor
14which relates to a health-care-insurance receivable, or general intangible or a rule
15of law, statute, or rule described in sub. (3) would be effective under law other than
16this chapter but is ineffective under sub. (1) or (3), the creation, attachment, or
17perfection of a security interest in the promissory note, health-care-insurance
18receivable, or general intangible:
AB111,118,2019 (a) Is not enforceable against the person obligated on the promissory note or
20the account debtor;
AB111,118,2221 (b) Does not impose a duty or obligation on the person obligated on the
22promissory note or the account debtor;
AB111,118,2523 (c) Does not require the person obligated on the promissory note or the account
24debtor to recognize the security interest, pay or render performance to the secured
25party, or accept payment or performance from the secured party;
AB111,119,5
1(d) Does not entitle the secured party to use or assign the debtor's rights under
2the promissory note, health-care-insurance receivable, or general intangible,
3including any related information or materials furnished to the debtor in the
4transaction giving rise to the promissory note, health-care-insurance receivable, or
5general intangible;
AB111,119,86 (e) Does not entitle the secured party to use, assign, possess, or have access to
7any trade secrets or confidential information of the person obligated on the
8promissory note or the account debtor; and
AB111,119,109 (f) Does not entitle the secured party to enforce the security interest in the
10promissory note, health-care-insurance receivable, or general intangible.
AB111,119,17 11409.409 Restrictions on assignment of letter-of-credit rights
12ineffective. (1)
Term or law restricting assignment generally ineffective. A
13term in a letter of credit or a rule of law, statute, rule, custom, or practice applicable
14to the letter of credit which prohibits, restricts, or requires the consent of an
15applicant, issuer, or nominated person to a beneficiary's assignment of or creation of
16a security interest in a letter-of-credit right is ineffective to the extent that the term
17or rule of law, statute, rule, custom, or practice:
AB111,119,1918 (a) Would impair the creation, attachment, or perfection of a security interest
19in the letter-of-credit right; or
AB111,119,2320 (b) Provides that the assignment or the creation, attachment, or perfection of
21the security interest may give rise to a default, breach, right of recoupment, claim,
22defense, termination, right of termination, or remedy under the letter-of-credit
23right.
AB111,120,4 24(2) Limitation on ineffectiveness under sub. (1). To the extent that a term in
25a letter of credit is ineffective under sub. (1) but would be effective under law other

1than this chapter or a custom or practice applicable to the letter of credit, to the
2transfer of a right to draw or otherwise demand performance under the letter of
3credit, or to the assignment of a right to proceeds of the letter of credit, the creation,
4attachment, or perfection of a security interest in the letter-of-credit right:
AB111,120,65 (a) Is not enforceable against the applicant, issuer, nominated person, or
6transferee beneficiary;
AB111,120,87 (b) Imposes no duties or obligations on the applicant, issuer, nominated person,
8or transferee beneficiary; and
AB111,120,119 (c) Does not require the applicant, issuer, nominated person, or transferee
10beneficiary to recognize the security interest, pay or render performance to the
11secured party, or accept payment or other performance from the secured party.
AB111,120,13 12SUBCHAPTER V
13 FILING
AB111,120,17 14409.501 Filing office. (1) Filing offices. Except as otherwise provided in
15sub. (2), if the local law of this state governs perfection of a security interest or
16agricultural lien, the office in which to file a financing statement to perfect the
17security interest or agricultural lien is:
AB111,120,1918 (a) The office designated for the filing or recording of a record of a mortgage on
19the related real property, if:
AB111,120,2020 1. The collateral is as-extracted collateral or timber to be cut; or
AB111,120,2221 2. The financing statement is filed as a fixture filing and the collateral is goods
22that are or are to become fixtures; or
AB111,121,223 (b) The office of the department of financial institutions or any office duly
24authorized by the department, in all other cases, including a case in which the

1collateral is goods that are or are to become fixtures and the financing statement is
2not filed as a fixture filing.
AB111,121,7 3(2) Filing office for transmitting utilities. The office in which to file a
4financing statement to perfect a security interest in collateral, including fixtures, of
5a transmitting utility is the office of the department of financial institutions. The
6financing statement also constitutes a fixture filing as to the collateral indicated in
7the financing statement which is or is to become fixtures.
AB111,121,11 8409.502 Contents of financing statement; record of mortgage as
9financing statement; time of filing financing statement. (1)
Sufficiency of
10financing statement.
Subject to sub. (2), a financing statement is sufficient only if
11it:
AB111,121,1212 (a) Provides the name of the debtor;
AB111,121,1413 (b) Provides the name of the secured party or a representative of the secured
14party; and
AB111,121,1515 (c) Indicates the collateral covered by the financing statement.
AB111,121,19 16(2) Real-property-related financing statements. Except as otherwise
17provided in s. 409.501 (2), to be sufficient, a financing statement that covers
18as-extracted collateral or timber to be cut, or which is filed as a fixture filing and
19covers goods that are or are to become fixtures, must satisfy sub. (1) and also:
AB111,121,2020 (a) Indicate that it covers this type of collateral;
AB111,121,2121 (b) Indicate that it is to be filed for record in the real property records;
AB111,121,2422 (c) Provide a description of the real property to which the collateral is related
23sufficient to give constructive notice of a mortgage under the law of this state if the
24description were contained in a record of the mortgage of the real property; and
AB111,122,2
1(d) If the debtor does not have an interest of record in the real property, provide
2the name of a record owner.
AB111,122,6 3(3) Record of mortgage as financing statement. A record of a mortgage is
4effective, from the date of recording, as a financing statement filed as a fixture filing
5or as a financing statement covering as-extracted collateral or timber to be cut only
6if:
AB111,122,77 (a) The record indicates the goods or accounts that it covers;
AB111,122,108 (b) The goods are or are to become fixtures related to the real property described
9in the record or the collateral is related to the real property described in the record
10and is as-extracted collateral or timber to be cut;
AB111,122,1211 (c) The record satisfies the requirements for a financing statement in this
12section other than an indication that it is to be filed in the real property records; and
AB111,122,1313 (d) The record is duly recorded.
AB111,122,16 14(4) Filing before security agreement or attachment. A financing statement
15may be filed before a security agreement is made or a security interest otherwise
16attaches.
AB111,122,18 17409.503 Name of debtor and secured party. (1) Sufficiency of debtor's
18name.
A financing statement sufficiently provides the name of the debtor:
AB111,122,2119 (a) If the debtor is a registered organization, only if the financing statement
20provides the name of the debtor indicated on the public record of the debtor's
21jurisdiction of organization which shows the debtor to have been organized;
AB111,122,2322 (b) If the debtor is a decedent's estate, only if the financing statement provides
23the name of the decedent and indicates that the debtor is an estate;
AB111,122,2524 (c) If the debtor is a trust or a trustee acting with respect to property held in
25trust, only if the financing statement:
AB111,123,4
11. Provides the name specified for the trust in its organic documents or, if no
2name is specified, provides the name of the settlor and additional information
3sufficient to distinguish the debtor from other trusts having one or more of the same
4settlors; and
AB111,123,65 2. Indicates, in the debtor's name or otherwise, that the debtor is a trust or is
6a trustee acting with respect to property held in trust; and
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