§ 6A-5-109. Fraud and forgery.
(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
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§ 6A-5-109. Fraud and forgery.
(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 this State
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).