Payments & Drafts check0 / 1 answered · 0 correct
Check 1
A seller emails “draft LC for approval.” What does “draft” most likely mean there?
Three Meanings of “Draft”
Avoid one of the most common beginner misunderstandings.
Bank draft
A bank-issued payment instrument.
Trade draft
A bill of exchange drawn by one party on another, payable at sight or later.
Draft wording
When bankers or traders say “send the draft LC/SBLC,” they may simply mean proposed wording for review before issuance. That draft is not yet the operative bank undertaking.
Context decides
The word “draft” alone is not enough. Ask whether someone means a payment instrument, bill of exchange or proposed document text.
Remember thisNever assume the word “draft” has only one banking meaning.
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