Iowa Code

Iowa Code § 554.5109 (2026)

Fraud and forgery

✓ current as of July 2026

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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:

a. the issuer shall honor the presentation, if honor is demanded by a nominated person who has given value in good faith and without notice of forgery or material fraud, a confirmer who has honored its confirmation in good faith, 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 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\n\nTue Dec 09 22:02:41 2025 Iowa Code 2026, Chapter 554 (108, 4) 103 UNIFORM COMMERCIAL CODE, §554.5111\n\n 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, paragraph “a”. [C66, 71, 73, 75, 77, 79, 81, §554.5109] 96 Acts, ch 1026, §8, 28; 2013 Acts, ch 30, §261 Referred to in §554.2512, 554.5108, 554.5110, 554.5113 \n

Notes of Decisions

Cited in 2 cases, 1980–1988 · leading case: First Nat'l Bank of Council Bluffs v. Rosebud Hous. Auth., 291 N.W.2d 41 (Iowa 1980).

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First Nat'l Bank of Council Bluffs v. Rosebud Hous. Auth., 291 N.W.2d 41 (Iowa 1980). · cites it 2× “By an innovative twist of applicable law the bank suggests the requirement that there be strict compliance with the terms of the letters of credit negates its obligation to *45 pay, because the June 18, 1976, contracts referred to in the letters and submitted with, the second…”

Atlas Mini Storage, Inc. v. First Interstate Bank of Des Moines, N.A., 426 N.W.2d 686 (Iowa Ct. App. 1988). · cites it 2× “” Iowa Code § 554.5109 (2) (1987); see Chase Manhattan Bank v.”

— Iowa Code § 554.5109(2) — 1 case

First Nat'l Bank of Council Bluffs v. Rosebud Hous. Auth., 291 N.W.2d 41 (Iowa 1980). “By an innovative twist of applicable law the bank suggests the requirement that there be strict compliance with the terms of the letters of credit negates its obligation to *45 pay, because the June 18, 1976, contracts referred to in the letters and submitted with, the second…”

— Iowa Code § 554.5109(l)(a) — 1 case

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