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operating without satisfaction of the precondition that sellers provide the required conforming documents. There are several reasons why a high percentage of documents presented are discrepant. One cause of the problem is the fact that the documents are prepared by the freight forwarder. Freight forwarders are not familiar with the letter of credit process and therefore very often prepare documents that are not in conformity with the letter of credit terms. A further cause is that, very often, the different people from different departments within the beneficiary's organization who are responsible for producing certain documents required under the letter of credit are not fully aware of the letter of credit terms, thereby causing the documents being produced to not be in compliance with the letter of credit terms. Another is when the shipping department is not aware that the goods must be shipped at the latest by the date specified in the letter of credit, thus, creating late shipment discrepancy. Entities which are responsible for issuing shipping documents are not as reliable as they once were. Shipping companies are backdating bills of lading issuers of certificates of origin issue the certificates depending on the shipper’s assertions without conducting any independent verification and sometimes they conceal the truth in order to get business.
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How Reliable Are Certificates of Compliance, July 2000., Letters of Credit Web Report. Retrieved 24 June 2001, from www.lettersofcreditonline.com/reports/archive/200007_casesinbrief.htm.

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(c) Extending the duty of the seller to provide genuine rather
than merely complying documents.
Whether a document is regular or not is always a question of fact. As a general rule it can only be stated that a document is irregular either if it does not include that which is regularly included in it or includes something which is not regularly found in that type of document.
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Irregularities can be of different types. First, any document, which is not valid or legal on its face, is irregular. Secondly, the irregularity can be a matter of form or appearance. An acknowledgement of dispatch or a parcel receipt, written by hand, without being properly stamped and headed, was irregular. A document might further be considered to be irregular if the circumstances of its presentation gives rise to suspicions.
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The question that should be raised here is, is it right, when the question of genuineness is raised, that courts and banks should take an attitude towards that fact that completely neglects the applicant’s interest After all, it is not just the buyer-applicant that expects a presentation of genuine and valid documents by the beneficiary in accordance with the terms and conditions of the credit, but the whole letter of credit system operates on the assumption that this is what will happen. It would be a pity if the function of courts is reduced to only facilitating banking practice by
140
Ellinger, op. cit, at 297. Ibid, at 299.

following the UCP,
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when following the UCP involves turning a blind eye to concepts of equity and justice and overlooking the applicant’s rights in general. Courts should generally take a view without being heavily affected by so-called banking practice. As Ellinger has stated, any error is incompatible with the main object of the contract Further, Ellinger also wisely points out a tender including nonconforming documents is a different commodity from the one bargained for and its tender is, therefore, contrary to the main object of the transaction or contract.”
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Accordingly, the cardinal feature of a letter of credit transaction is the performance by the tender of the documents specified by the buyer in the application form and by the bank in the letter of credit The object of the bank’s letter of credit is to ensure that the seller-beneficiary of the credit gets paid for the goods he sells and the buyer receives, in the shape of the relative documents of title and other required documents, the goods that the seller has contracted to deliver to it. The system requires the beneficiary to provide true documents. This is the beneficiary’s sole responsibility and the basis for the whole transaction of the letter of credit. Illustrating this, §5-114(2) of the UCC carefully delineates the issuer’s obligations upon the presentation of documents, which appeared on their face to
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See, for example, Standard Chartered Bank v Pakistan National Shipping Corporation, op.cit., and discussion by R. Sayers, Banks are Not Always Shining Innocents, DCW, June
2001, 28, at 34, in which he poses the question after reviewing the case Can it realistically be supposed that courts should readily give effect to practice at the expense of distorting the law, particularly that governing fraud or falsity
143
Ellinger, op.cit., at 169.
144
Ibid.
145
Ibid, at 189.

conform to the terms of the credit. But where a required document does not in fact conform to the warranties made on negotiation or transfer (if a document of title were forged or fraudulent, or if there was fraud in the transaction, the issuer is not obliged to honour but could still honour the credit if acting in good faith, despite notification from the applicant of fraud, forgery or other defect not apparent on the face of the documents. Under this section, if a document does not conform to the warranties that the law infers from its presentation, the issuer may dishonour. These warranties are derived from §7-507 of the UCC, which includes a warranty to the issuer that the document is genuine, that the presenting party has no knowledge of any fact that would impair its validity of or worth, and that negotiation or transfer is rightful and fully effective.”
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The beneficiary should have the burden to prove the genuineness of the documents under the UCP; it would be much easier for the beneficiary to discharge such a burden than for the applicant- buyer. The seller could either provide evidence to demonstrate his innocence or, in the absence of such evidence, resort to the underlying contract for recovery. This is in conformity with the letter of credit system and is fair and will not assist fraud.

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