N.Y. Uniform Commercial Code 5-109 – Fraud and forgery
Section 5–109. Fraud and forgery.
Terms Used In N.Y. Uniform Commercial Code 5-109
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
- Fraud: Intentional deception resulting in injury to another.
- Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
(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.