Section 45.05.109. Fraud and forgery.

   (a) If a presentation is made that appears on its face to comply strictly 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, the issuer
        (1) shall honor the presentation, if honor is demanded by
             (A) a nominated person that has given value in good faith and without notice of forgery or material fraud;
             (B) a confirmer that has honored its confirmation in good faith;
             (C) a holder in due course of a draft that was drawn under the letter of credit and that was taken after acceptance by the issuer or nominated person; or
             (D) an assignee of the issuer's or nominated person's deferred obligation if the obligation 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) acting in good faith, may honor or dishonor the presentation in a case not covered by (1) of this subsection.
   (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 the beneficiary, issuer, or nominated person may suffer because the relief is granted;
        (3) all of the conditions that entitle a person to the relief under the law of this state are 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 (a)(1) of this section.

Authorities

45.02.512;45.05.108;45.05.110;45.05.113

Notes

References

AS 45.02.512 Payment by buyer before inspection.
AS 45.05.108 Issuer's rights and obligations.
AS 45.05.110 Warranties.
AS 45.05.113 Transfer by operation of law.

History

(Sec. 5.109 ch 114 SLA 1962; am Sec. 11 ch 75 SLA 1999)