In a L/C, if the confirming bank and negotiating bank are the same entity, advance payment made to the seller is without recourse. However, in the event that the confirming bank and negotiating bank are two separate entities, advance payment made by the negotiating bank to the seller is with recourse.

Explain why this is so.

Please explain in the following order:

Start your discussion with the confirming bank and negotiating bank being same entity, followed by the confirming bank and negotiating bank being two different entities. (8 marks)