(1) 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:

Terms Used In Oregon Statutes 75.1090

  • Applicant: includes a person who requests that an issuer issue a letter of credit on behalf of another if the person making the request undertakes an obligation to reimburse the issuer. See Oregon Statutes 75.1020
  • 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
  • Beneficiary: includes a person to whom drawing rights have been transferred under a transferable letter of credit. See Oregon Statutes 75.1020
  • Confirmer: means a nominated person who undertakes, at the request or with the consent of the issuer, to honor a presentation under a letter of credit issued by another. See Oregon Statutes 75.1020
  • Document: means a draft or other demand, document of title, investment security, certificate, invoice or other record, statement or representation of fact, law, right or opinion:

    (A) That is presented in a written or other medium permitted by the letter of credit or, unless prohibited by the letter of credit, by the standard practice referred to in ORS § 75. See Oregon Statutes 75.1020

  • 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.
  • Good faith: means honesty in fact in the conduct of the transaction concerned. See Oregon Statutes 75.1020
  • Issuer: means a bank or other person that issues a letter of credit, but does not include an individual who makes an engagement for personal, family or household purposes. See Oregon Statutes 75.1020
  • 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.
  • Letter of credit: means a definite undertaking that satisfies the requirements of ORS § 75. See Oregon Statutes 75.1020
  • Nominated person: means a person whom the issuer:

    (A) Designates or authorizes to pay, accept, negotiate or otherwise give value under a letter of credit; and

    (B) Undertakes by agreement or custom and practice to reimburse. See Oregon Statutes 75.1020

  • 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.
  • Person: includes individuals, corporations, associations, firms, partnerships, limited liability companies and joint stock companies. See Oregon Statutes 174.100
  • Presentation: means delivery of a document to an issuer or nominated person for honor or giving of value under a letter of credit. See Oregon Statutes 75.1020

(a) The issuer shall honor the presentation, if honor is demanded by:

(A) A nominated person who has given value in good faith and without notice of forgery or material fraud;

(B) A confirmer who has honored its confirmation in good faith;

(C) A holder in due course of a draft drawn under the letter of credit 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 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

(b) The issuer, acting in good faith, may honor or dishonor the presentation in any other case.

(2) 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:

(a) The relief is not prohibited under the law applicable to an accepted draft or deferred obligation incurred by the issuer;

(b) 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;

(c) All of the conditions to entitle a person to the relief under the law of this state have been met; and

(d) 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 (1)(a) of this section. [1961 c.726 § 75.1090; 1997 c.150 § 12]

 

  Previous section
Next section  
 Chapter 75 Contents