"Enforcement of Letters of Credit in Ontario",
International Law Office, December 2009
Date:
December 22 2009
In Nareerux Import Co Ltd v Canadian Imperial Bank of Commerce(1) the Ontario Court of Appeal considered whether an issuer of a letter of credit could refuse payment based on the beneficiary's non-compliance with the letter of credit's terms and conditions. The court ruled in favour of the beneficiary and held that where the issuer has knowingly contributed to, or acquiesced in, the circumstances that undermined the prospect of strict compliance, that issuer is prevented from relying upon the defence of noncompliance. The issuer's conduct was a direct breach of the principle of autonomy underpinning letter of credit transactions and a breach of the issuer's implied duty of good faith.
Republished with permission.
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