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§12A-5-109.
§12A-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 paragraph (1) of subsection (a) of this
section.
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