Abstract

Fraud is the only widely accepted exception to the autonomy principle applicable to letters of
credit. However, a recent decision of the Singapore High Court, Bank of China Ltd, Singapore
Branch v BP Singapore Pte Ltd [2021] SGHC 120, [2021] 5 SLR 738, appears to support the
possibility of a further exception: the negligence exception. Other lawsuits pending before
the Singaporean courts also implicitly refer to (and plead) such a possibility. This paper argues
that the negligence exception should be rejected.

Keywords: Trade finance law, letters of credit, documentary credits, autonomy principle, negligence, duty of care, foreseeability, proximity, public policy