Payments & Drafts check0 / 1 answered · 0 correct
Check 1
Who gives the order to pay in a bill of exchange?
Bill of Exchange / Trade Draft
Understand the drawer, drawee, payee, sight and time draft.
What it is
A bill of exchange is a written order by the drawer directing the drawee to pay a stated sum to the payee or order, subject to the governing law and instrument requirements.
Sight vs time
A sight draft is payable when presented according to its terms. A time draft is payable at a future time, such as 60 days after sight or a stated date.
Why it matters in trade
Bills of exchange have long been used with documentary credits, collections and trade finance. The exact legal treatment depends on applicable negotiable-instruments law.
Do not confuse with a bank draft
A trade draft is an order drawn by one party on another. A bank draft is generally a bank-issued payment instrument. The same word “draft” is doing different jobs.
Remember thisBill of exchange = an order to pay; promissory note = a promise to pay.
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