                                 CODE OF VIRGINIA

FRAUD AND FORGERY (§ 8.5A-109)

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&#8217;s or nominated person&#8217;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 Commonwealth 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).

HISTORY: 1997, c. 343.