§ 26-1-5.1-109 — Fraud and forgery

Indiana § 26-1-5.1-109

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 5.1: Letters of Credit

Text

(a) 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:
(1) the issuer shall honor the presentation, if honor is demanded
by:
(i) a nominated person who has given value in good faith and
without notice of forgery or material fraud;
(ii) a confirmer who has honored its confirmation in good faith;
(iii) 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
(iv) 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
(2) the issuer, acting in good faith, may honor or dishonor the
presentation in any other case.
(b) If an applicant claims that a required document is forged or
materially fraudulent or that honor of the presentation would facilitate
a material fraud by the beneficiary on the issuer 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:
(1) the relief is not prohibited under the law applicable to an
accepted draft or deferred obligation incurred by the issuer;
(2) 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;
(3) all of the conditions to entitle a person to the relief under the
law of Indiana have been met; and
(4) 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 (a)(1).

Legislative History

As added by P.L.183-1996, SEC.4.