KRS 355.5-109: Fraud and forgery.

(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:

1. A nominated person who has given value in good faith and without

notice of forgery or material fraud;

2. A confirmer who has honored its confirmation in good faith;

3. 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

4. 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 r equired 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 h onoring 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

Commonwealth 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.