Tex.
Bus. & Com. Code Section 5.110
Warranties
(a)
If its presentation is honored, the beneficiary warrants:(1)
to the issuer, any other person to whom presentation is made, and the applicant that there is no fraud or forgery of the kind described in Section 5.109 (Fraud and Forgery)(a); and(2)
to the applicant that the drawing does not violate any agreement between the applicant and beneficiary or any other agreement intended by them to be augmented by the letter of credit.(b)
The warranties in Subsection (a) are in addition to warranties arising under Chapters 3 (Insolvency, Fraudulent Transfers, and Fraud), 4 (Business Opportunities and Agreements), 7 (Receipts, Documents of Title, and Other Instruments), and 8 (Security Instruments) because of the presentation or transfer of documents covered by any of those chapters.(c)
Notwithstanding any agreement or term to the contrary, the warranties in Subsection (a) do not arise until the issuer honors the letter of credit.
Source:
Section 5.110 — Warranties, https://statutes.capitol.texas.gov/Docs/BC/htm/BC.5.htm#5.110 (accessed Apr. 29, 2024).
