§ 554.5109 — Fraud and forgery

Iowa § 554.5109

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 554: UNIFORM COMMERCIAL CODE

Text

1. If a presentation is made that appears on its face strictly to comply with the terms and
conditions of the letter of credit, but a required document is forged or materially fraudulent,
or honor of the presentation would facilitate a material fraud by the beneficiary on the issuer
or applicant:
a. the issuer shall honor the presentation, if honor is demanded by a nominated person
who has given value in good faith and without notice of forgery or material fraud, a confirmer
who has honored its confirmation in good faith, a holder in due course of a draft drawn under
the letter of credit which was taken after acceptance by the issuer or nominated person, or an
assignee of the issuer’s or nominated person’s deferred obligation that was taken for value
and without notice of forgery or material fraud after the obligation was incurred by the issuer
or nominated person; and

b. the issuer, acting in good faith, may honor or dishonor the presentation in any other
case.
2. If an applicant claims that a required document is forged or materially fraudulent or
thathonorofthepresentationwouldfacilitateamaterialfraudbythebeneficiaryontheissuer
or applicant, a court of competent jurisdiction may temporarily or permanently enjoin the
issuer from honoring a presentation or grant similar relief against the issuer or other persons
only if the court finds that:
a. the relief is not prohibited under the law applicable to an accepted draft or deferred
obligation incurred by the issuer;
b. a beneficiary, issuer, or nominated person who may be adversely affected is adequately
protected against loss that it may suffer because the relief is granted;
c. all of the conditions to entitle a person to the relief under the law of this state have been
met; and
d. on the basis of the information submitted to the court, the applicant is more likely than
not to succeed under its claim of forgery or material fraud and the person demanding honor
does not qualify for protection under subsection 1, paragraph “a”.

Legislative History

[C66, 71, 73, 75, 77, 79, 81, §554.5109]