§490:5-109  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). [L 1996, c 39, pt of §1]