diff --git a/cli/create.go b/cli/create.go
index dbbf2e445..0bbc288ca 100644
--- a/cli/create.go
+++ b/cli/create.go
@@ -92,6 +92,36 @@ var createCLICommand = cli.Command{
 // Use a variable to allow tests to modify its value
 var getKernelParamsFunc = getKernelParams
 
+func handleFactory(ctx context.Context, runtimeConfig oci.RuntimeConfig) {
+	if !runtimeConfig.FactoryConfig.Template {
+		return
+	}
+
+	factoryConfig := vf.Config{
+		Template: true,
+		VMConfig: vc.VMConfig{
+			HypervisorType:   runtimeConfig.HypervisorType,
+			HypervisorConfig: runtimeConfig.HypervisorConfig,
+			AgentType:        runtimeConfig.AgentType,
+			AgentConfig:      runtimeConfig.AgentConfig,
+		},
+	}
+
+	kataLog.WithField("factory", factoryConfig).Info("load vm factory")
+
+	f, err := vf.NewFactory(ctx, factoryConfig, true)
+	if err != nil {
+		kataLog.WithError(err).Warn("load vm factory failed, about to create new one")
+		f, err = vf.NewFactory(ctx, factoryConfig, false)
+		if err != nil {
+			kataLog.WithError(err).Warn("create vm factory failed")
+			return
+		}
+	}
+
+	vci.SetFactory(ctx, f)
+}
+
 func create(ctx context.Context, containerID, bundlePath, console, pidFilePath string, detach, systemdCgroup bool,
 	runtimeConfig oci.RuntimeConfig) error {
 	var err error
@@ -103,6 +133,17 @@ func create(ctx context.Context, containerID, bundlePath, console, pidFilePath s
 	setExternalLoggers(ctx, kataLog)
 	span.SetTag("container", containerID)
 
+	if bundlePath == "" {
+		cwd, err := os.Getwd()
+		if err != nil {
+			return err
+		}
+
+		kataLog.WithField("directory", cwd).Debug("Defaulting bundle path to current directory")
+
+		bundlePath = cwd
+	}
+
 	// Checks the MUST and MUST NOT from OCI runtime specification
 	if bundlePath, err = validCreateParams(ctx, containerID, bundlePath); err != nil {
 		return err
@@ -118,29 +159,7 @@ func create(ctx context.Context, containerID, bundlePath, console, pidFilePath s
 		return err
 	}
 
-	if runtimeConfig.FactoryConfig.Template {
-		factoryConfig := vf.Config{
-			Template: true,
-			VMConfig: vc.VMConfig{
-				HypervisorType:   runtimeConfig.HypervisorType,
-				HypervisorConfig: runtimeConfig.HypervisorConfig,
-				AgentType:        runtimeConfig.AgentType,
-				AgentConfig:      runtimeConfig.AgentConfig,
-			},
-		}
-		kataLog.WithField("factory", factoryConfig).Info("load vm factory")
-		f, err := vf.NewFactory(ctx, factoryConfig, true)
-		if err != nil {
-			kataLog.WithError(err).Warn("load vm factory failed, about to create new one")
-			f, err = vf.NewFactory(ctx, factoryConfig, false)
-			if err != nil {
-				kataLog.WithError(err).Warn("create vm factory failed")
-			}
-		}
-		if err == nil {
-			vci.SetFactory(ctx, f)
-		}
-	}
+	handleFactory(ctx, runtimeConfig)
 
 	disableOutput := noNeedForOutput(detach, ociSpec.Process.Terminal)
 
diff --git a/cli/create_test.go b/cli/create_test.go
index 930f6832f..287773e29 100644
--- a/cli/create_test.go
+++ b/cli/create_test.go
@@ -13,6 +13,7 @@ import (
 	"io/ioutil"
 	"os"
 	"path/filepath"
+	"regexp"
 	"strings"
 	"testing"
 
@@ -561,6 +562,13 @@ func TestCreateProcessCgroupsPathSuccessful(t *testing.T) {
 	err = writeOCIConfigFile(spec, ociConfigFile)
 	assert.NoError(err)
 
+	err = create(context.Background(), testContainerID, "", testConsole, pidFilePath, false, true, runtimeConfig)
+	assert.Error(err, "bundle path not set")
+
+	re := regexp.MustCompile("config.json.*no such file or directory")
+	matches := re.FindAllStringSubmatch(err.Error(), -1)
+	assert.NotEmpty(matches)
+
 	for _, detach := range []bool{true, false} {
 		err := create(context.Background(), testContainerID, bundlePath, testConsole, pidFilePath, detach, true, runtimeConfig)
 		assert.NoError(err, "detached: %+v", detach)
diff --git a/cli/run_test.go b/cli/run_test.go
index 362e56389..2154f9db1 100644
--- a/cli/run_test.go
+++ b/cli/run_test.go
@@ -13,6 +13,7 @@ import (
 	"os"
 	"os/exec"
 	"path/filepath"
+	"regexp"
 	"testing"
 
 	vc "github.com/kata-containers/runtime/virtcontainers"
@@ -290,13 +291,44 @@ func TestRunContainerSuccessful(t *testing.T) {
 		testingImpl.DeleteContainerFunc = nil
 	}()
 
-	err = run(context.Background(), d.sandbox.ID(), d.bundlePath, d.consolePath, "", d.pidFilePath, false, true, d.runtimeConfig)
+	type errorTestArgs struct {
+		bundlePath string
 
-	// should return ExitError with the message and exit code
-	e, ok := err.(*cli.ExitError)
-	assert.True(ok, "error should be a cli.ExitError: %s", err)
-	assert.Empty(e.Error())
-	assert.NotZero(e.ExitCode())
+		// regex string for text of error message
+		errorRE string
+
+		// If true, expect a cli.ExitError, else expect any other type
+		// of error.
+		expectExitError bool
+	}
+
+	args := []errorTestArgs{
+		{"", "config.json: no such file or directory", false},
+		{d.bundlePath, "", true},
+	}
+
+	for i, a := range args {
+		err = run(context.Background(), d.sandbox.ID(), a.bundlePath, d.consolePath, "", d.pidFilePath, false, true, d.runtimeConfig)
+		assert.Errorf(err, "test args %d (%+v)", i, a)
+
+		if a.errorRE == "" {
+			assert.Empty(err.Error())
+		} else {
+			re := regexp.MustCompile(a.errorRE)
+			matches := re.FindAllStringSubmatch(err.Error(), -1)
+			assert.NotEmpty(matches)
+		}
+
+		e, ok := err.(*cli.ExitError)
+
+		if a.expectExitError {
+			// should return ExitError with the message and exit code
+			assert.Truef(ok, "test args %d (%+v): error should be a cli.ExitError: %s", i, a, err)
+			assert.NotZero(e.ExitCode())
+		} else {
+			assert.Falsef(ok, "test args %d (%+v): error should not be a cli.ExitError: %s", i, a, err)
+		}
+	}
 }
 
 func TestRunContainerDetachSuccessful(t *testing.T) {