Concerns regarding the Ontario court's judgment in the Nareerux case

In a recent article in this journal, Deborah Holbrook has summarized the complex facts of an Ontario letter of credit case, Nareerux Import Co v. Canadian Imperial Bank of Commerce, and parsed the court's critical rulings and the court's stated reasons for them. This article assumes familiarity with those efforts and takes the analysis of Nareerux a step further. It criticizes the court's rulings and the court's reasoning. In Nareerux, the Ontario Court of Appeal held that a letter of credit issuer owed duties to the letter of credit beneficiary in addition to those specified in the credits at issue. The trial court found that the issuer knew that the importer, the applicant for the credits issued by the defendant bank, was reselling the shrimp in a manner that made it impossible for the beneficiary/exporter to comply with the documentary conditions of the credit.