Article 2 Vs Article 12 of UCP600

[dinesh2476]

Dear Experts,

Confirmed LC -Without recourse
Draft - I am clear.

What is the difference(other than above) between both these clauses while they suggest payment before maturity to the presenter. Reason for having 2 difference clauses

ARTICLE 2
Definitions
Negotiation means the purchase by the nominated bank of drafts (drawn on a bank
other than the nominated bank) and/or documents under a complying presentation,
by advancing or agreeing to advance funds to the beneficiary on or before the
banking day on which reimbursement is due to the nominated bank

ARTICLE 12
Nomination

b. By nominating a bank to accept a draft or incur a deferred payment undertaking,
an issuing bank authorizes that nominated bank to prepay or purchase a draft
accepted or a deferred payment undertaking incurred by that nominated bank.

Regards
Dinesh

[shafi865]

Dear Dinesh !
The differences between the two articles are as follows--

Firstly, Article 2 is for Negotiation Type of LC and Article 12 (b) is for Acceptance and Deferred Payment (DP) Type of LC

Secondly,In case of Negotiation LC, the draft is drawn on a bank other than the nominated bank and In case of Acceptance LC, draft is drawn on the nominated bank who accepts that draft. It may be noted DP LC does not require any draft. Here nominated bank incur the deferred payment undertaking.

Regards,
Shafique