Also known as: agreement not to assert defenses · agreements not asserting defenses · defense waiver agreements
Written by attorneys · grounded in primary & secondary sources — see below
An agreement by an account debtor to relinquish the right to assert defenses or claims against an assignee of the underlying contract. The agreement removes those defenses from the bundle of rights that would otherwise travel with the assigned payment obligation. Enforcement of the agreement allows the assignee to collect the face amount without reduction for the waived matters.
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Astra Aerospace contracted with Avalon Pharmaceuticals for monthly equipment deliveries and initialed a clause waiving all defenses against future assignees of Avalon's payment rights. Avalon assigned the receivables to Alliance Holdings for immediate financing. Alliance notified Astra of the assignment. When Astra later discovered defects in the equipment, it could not use those claims to reduce the amount owed to Alliance.
Compressors Plus sold compressor units to Service Tech De Mexico under a supply contract containing an initialed waiver of defenses against assignees. After defects surfaced, Compressors Plus assigned the unpaid invoices to a financing company. The financing company gave prompt notice of the assignment. Service Tech could not assert its warranty claims to offset the amount demanded by the financing company.
The agreement prevents offset when it is enforceable and expressly waives defenses against assignees. Courts examine whether the account debtor reviewed and initialed the clause after full disclosure. In commercial transactions the waiver operates independently of notification timing and removes both transaction-based recoupment claims and pre-notice defenses from the assignee's exposure.
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A valid waiver bars the account debtor from creating new defenses through post-notification agreements with the assignor. The assignee is not bound by modifications executed after notice. Only reductions that qualify as pre-notification recoupment claims survive the waiver.
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The waiver overrides the default rule that preserves pre-notice claims. Once the account debtor has made an enforceable agreement not to assert defenses, the assignee collects the face amount even though the claims accrued before notification. The waiver must be clear and knowing. Mere consent to assignment does not constitute waiver.
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Initialing the waiver clause after reviewing the full contract, combined with the clause's explicit reference to future assignees, demonstrates knowing agreement. Courts treat such initialed provisions as enforceable in commercial deals. Absence of consumer protections further supports enforcement.
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