§ 25-5-109. Fraud and forgery.
§ 25‑5‑109. Fraudand forgery.
(a) If a presentationis made that appears on its face strictly to comply with the terms andconditions of the letter of credit, but a required document is forged ormaterially fraudulent, or honor of the presentation would facilitate a materialfraud by the beneficiary on the issuer or applicant:
(1) The issuer shallhonor the presentation, if honor is demanded by (i) a nominated person who hasgiven 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 indue course of a draft drawn under the letter of credit which was taken afteracceptance by the issuer or nominated person, or (iv) an assignee of theissuer's or nominated person's deferred obligation that was taken for value andwithout notice of forgery or material fraud after the obligation was incurredby the issuer or nominated person; and
(2) The issuer, actingin good faith, may honor or dishonor the presentation in any other case.
(b) If an applicantclaims that a required document is forged or materially fraudulent or thathonor of the presentation would facilitate a material fraud by the beneficiaryon the issuer or applicant, a court of competent jurisdiction may temporarilyor permanently enjoin the issuer from honoring a presentation or grant similarrelief against the issuer or other persons only if the court finds that:
(1) The relief is notprohibited under the law applicable to an accepted draft or deferred obligationincurred by the issuer;
(2) A beneficiary,issuer, or nominated person who may be adversely affected is adequatelyprotected against loss that it may suffer because the relief is granted;
(3) All of theconditions to entitle a person to the relief under the law of this State havebeen met; and
(4) On the basis of theinformation submitted to the court, the applicant is more likely than not tosucceed under its claim of forgery or material fraud and the person demandinghonor does not qualify for protection under subdivision (a)(1) of this section.(1999‑73, s. 1.)