§ 41-05-09 — (5-109) Fraud - Forgery

North Dakota § 41-05-09

• Jurisdiction: North Dakota
• Title 41: Uniform Commercial Code
• Ch. 41-05: Letters of Credit

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:
(1) A nominated person who has given value in good faith and without notice of
forgery or material fraud;
(2) A confirmer who has honored its confirmation in good faith;
(3) 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
(4) 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
that honor of the presentation would facilitate a material fraud by the beneficiary on the
issuer or applicant, a court of competent jurisdiction, temporarily or permanently, may
enjoin the issuer from honoring a presentation or may 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 subdivision a of
subsection 1.