Importer Co. entered into a contract with Exporter Co. to buy 4,000 fluorescent garden gnomes. The contract of sale required Importer to arrange an irrevocable letter of credit facility in favour of Exporter. The letter of credit, which expressly adopted the 2006 Uniform Customs and Practice for Documentary Letters of Credit (UCP600), was expressed to be payable against receipt of a clean, on-board bill of lading, an insurance policy, a commercial invoice identifying the goods and a certificate of inspection and origin. In addition, the credit was payable against a 60-day bill of exchange drawn by Exporter on the Issuing Bank.

The market for garden gnomes has fallen markedly and Importer now wishes to opt out of the contract. But the letter of credit facility has already been provided. With this in mind, advise the Importer as to his legal position in the following situations:

The invoice describes the garden gnomes to be "premium quality", whereas the letter of credit describes them as "export quality".

Importer has become aware that the certificate of inspection and origin, although it appears to be in order, is really incorrect and negligently completed. He believes that in fact there are 2,000 gnomes and 2,000 fairies being shipped to him.

The issuing bank has become aware of a rumor that Exporter is implicated in a racket involving forgery of bills of lading and there is a suspicion that this bill of lading might be forged. The bank has not passed this information on to Importer before completion of the transaction.