Colorado Revised Statutes

Colo. Rev. Stat. § 4-5-109 (2026)

Fraud and forgery

✓ current as of July 2026

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(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) of this section.

Source: L. 96: Entire article R&RE, p. 196, § 1, effective July 1.

Editor's note: This section is similar to former § 4-5-114 as it existed prior to 1996.

Notes of Decisions

Cited in 3 cases, 1981–2020 · leading case: Colorado Nat'l Bank of Denver v. Bd. of Cnty. Commissioners, 634 P.2d 32 (Colo. 1981).

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Colorado Nat'l Bank of Denver v. Bd. of Cnty. Commissioners, 634 P.2d 32 (Colo. 1981). · cites it 3× “We next consider whether the drafts and demands for payment by the County complied with the terms of the letters of credit, or if not, whether the Bank waived any nonconforming demands. The Bank was obligated to examine the documents "with care so as to ascertain that on their…”

Grays v. Auto Mart USA, LLC (D. Colo. 2020). · cites it 16× “Summary All Defendants are entitled to summary judgment on Claims One and Sixteen (to the extent it alleges a violation of C.R.S. § 4-5-109). In addition, the individual Defendants are entitled to summary judgment on Claims 3 and 20.”

Grays v. Auto Mart USA, LLC (D. Colo. 2019). “§ 4-5-109 (a), (v) fraud and forgery, and (vi) violation of 15 U.”

— Colo. Rev. Stat. § 4-5-109(2) — 1 case

Colorado Nat'l Bank of Denver v. Bd. of Cnty. Commissioners, 634 P.2d 32 (Colo. 1981). “We next consider whether the drafts and demands for payment by the County complied with the terms of the letters of credit, or if not, whether the Bank waived any nonconforming demands. The Bank was obligated to examine the documents "with care so as to ascertain that on their…”

— Colo. Rev. Stat. § 4-5-109(a) — 1 case

Grays v. Auto Mart USA, LLC (D. Colo. 2020). “Summary All Defendants are entitled to summary judgment on Claims One and Sixteen (to the extent it alleges a violation of C.R.S. § 4-5-109). In addition, the individual Defendants are entitled to summary judgment on Claims 3 and 20.”

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