(1) Until the debtor of receivables receives notification of a security interest in receivables, the debtor is discharged from the obligation on the receivable by paying in accordance with the agreement giving rise to the receivable.
(2) After the debtor of receivables receives notification of a security interest in receivables, subject to subsections (3) to (7), the debtor is discharged only by paying the secured creditor or, if otherwise instructed in the notification or subsequently by the secured creditor in a writing received by the debtor of the receivable, in accordance with that payment instruction.
(3) Where the debtor of receivables receives more than one payment instruction relating to a single security interest in the same receivable created by the same grantor, the debtor is discharged by paying in accordance with the last payment instruction received from the secured creditor before payment.
(4) Where the debtor of receivables receives notification —
(a) of more than one security interest in the same receivable created by the same grantor, the debtor is discharged by paying in accordance with the first notification received;
(b) of more than one security interest in the same receivable created by different grantors, whether it is the initial grantor or a secured creditor that grants a security interest in the receivable to a subsequent secured creditor, the debtor is discharged by paying in accordance with the notification of the last of the security interests;
(c) of a security interest in a part of or an undivided interest in one or more receivables, the debtor is discharged by paying in accordance with the notification or by paying in accordance with this section as if the debtor of receivables had not received the notification;
(d) under paragraph (c) and pays in accordance with the notification, the debtor is discharged only to the extent of the part or undivided interest paid;
(e) of a security interest in the receivable from the secured creditor, the debtor of receivables may request the secured creditor to provide —
(i) within a reasonable period of time, adequate proof of the security interest, and
(ii) if the security interest is created in favour of a secured creditor by the initial or another secured creditor —
(A) adequate proof of the security interest created by the initial grantor in favour of the initial secured creditor; and
(B) of an intermediate security interest.
(5) Until the secured creditor complies with a request under subsection (4)(e), the debtor of receivables is discharged by paying the grantor in accordance with this section as if the debtor had not received notification of the security interest.
(6) Adequate proof of a security interest under subsection (4)(e) includes a written communication from the grantor which indicates that a security interest has been created.
(7) This section does not affect another ground on which payment by the debtor of receivables to the person entitled to payment or authorized to receive payment discharges the debtor of receivables.