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HomeCivil CodeDiv. 2Pt. 3Ch. 1Art. 1§ 955 Nonnegotiable Instrument Transfers

§ 955 Nonnegotiable Instrument Transfers

Civil Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 955 Nonnegotiable Instrument Transfers

Key Takeaways

  • •If you sell or transfer certain business papers (like IOUs or payment records), the deal is official when you sign them over and hand them to the buyer.
  • •You don’t have to tell the person who owes the money about the sale for it to be valid.
  • •Even if the papers are sold, the person who owes money can still pay the original owner unless they know about the sale.

Example

You sell your small business, including all the IOUs your customers gave you for future payments.

The sale of those IOUs is official once you sign them over and give them to the buyer. Your customers don’t have to be told about the sale, and they can still pay you unless they find out about it.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 955 Nonnegotiable Instrument Transfers

A transfer other than one intended to create a security interest (paragraph (1) or (3) of subdivision (a) of Section 9109 of the Commercial Code) of a nonnegotiable instrument which is otherwise negotiable within Division 3 of the Commercial Code but which is not payable to order or to bearer and a sale of accounts, chattel paper, payment intangibles, or promissory notes as part of a sale of the business out of which they arose (paragraph (4) of subdivision (d) of Section 9109 of the Commercial Code) shall be deemed perfected against third persons when such property rights have been endorsed or assigned in writing and in the case of such instruments or chattel paper delivered to the transferee, whether or not notice of such transfer or sale has been given to the obligor; but such endorsement, assignment, or delivery is not, of itself, notice to the obligor so as to invalidate any payments made by the obligor to the transferor. (Amended by Stats. 1999, Ch. 991, Sec. 2. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)

Last verified: January 21, 2026

Key Terms

transfersecurity interestnonnegotiable instrumentaccountschattel paperpayment intangiblespromissory notesperfected against third personsendorsed or assigned in writingdelivered to the transfereeobligor

Related Statutes

  • § 1039 Property Title Transfer
  • § 955.1 Payment Intangible Transfers
  • § 1040 Voluntary Transfer Contracts
  • § 1047 Adverse Possession Transfers
  • § 1052 Property Transfer Requirements

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Civil Code. Section 955.
View Official Source