For an international seller to be able to obtain clean shipping documents is a matter of considerable importance to him. Absent fraud on his part, a cif seller can demand payment of the price against tender of such documents, leaving any dispute about the goods themselves to be resolved later. If he is a beneficiary under a documentary credit, he can use clean shipping documents to obtain payment under a documentary credit, whatever disputes there may be on the underlying transaction. The position may be different where one or more of the shipping documents is so defective that it can be described as a nullity. Even if it is not a nullity, it may perhaps be rejected if it can be described as non-genuine. If so, the international seller/beneficiary may be deprived of his assurance of payment, even in the absence of any fraud or other moral culpability on his part. Though the Court of Appeal has considered the application of a nullity concept to documentary credits, it has not provided a definitive solution. The courts have been silent on whether a nullity concept should apply to international sale contracts, and on whether non-genuine documents can be rejected, under such contracts. This article examines whether the concepts of non-genuine shipping documents, and nullities, are meaningful and, if so, what is meant by a nullity and a non-genuine shipping document.

Readers with no more than a passing knowledge of the law of documentary credits will know that in United City Merchants (Investments) Ltd v. Royal Bank of Canada (The American Accord),1 the House of Lords established that a confirming bank must accept apparently conforming documents, unless fraud can be imputed to the beneficiary.2 Thus, in the absence of fraud on his part, the presentation of conforming documents under a documentary credit entitles the beneficiary to payment. If the goods do not conform, that is a matter for separate dispute under the underlying sale contract, with which the bank is not concerned.3