There has been a difference in opinion between the courts in Singapore and the United Kingdom as to whether there is a nullity exception to the autonomy principle in letter of credit transactions. This article analyses the applicable principles and judicial decisions. It assesses whether the law should include a nullity exception over and above the fraud exception, and the circumstances under which such an exception might apply. The formulation of the nullity exception by the Court of Appeal in Singapore as well as possible future developments are also considered.