Code of Alabama

Ala. Code § 7-5-109 (2026)

Fraud and Forgery.

✓ official Alabama Legislature (ALISON) text, current July 2026

Find cases: SyfertCases citing this section JustiaAla. Code CornellLII Search CasesGoogle Scholar

(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).

(Acts 1997, No. 97-702, p. 1427, §1.)

Notes of Decisions

Cited in 2 cases, 2006–2008 · leading case: Holiday Isle, LLC v. Adkins, 12 So. 3d 1173 (Ala. 2008).

Sort: Relevance Newest Treatment

Holiday Isle, LLC v. Adkins, 12 So. 3d 1173 (Ala. 2008). · cites it 4× “The relevance of these contested facts to a proceeding to enjoin the issuer from honoring a letter of credit is limited to the circumstances set forth in § 7-5-109, Ala.Code 1975, authorizing an injunction to prevent a material fraud by the beneficiary.”

Cont'l Cas. v. SouthTrust Bank, NA, 933 So. 2d 337 (Ala. 2006). “Code 1975, which states, in part: "(a) Except as otherwise provided in Section 7-5-109, an issuer shall honor a presentation that, as determined by the standard practice referred to in subsection (e), appears on its face strictly to comply with the terms and conditions of the…”

Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.