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draft:
n. (17c)
1. An unconditional written order signed by one person (the drawer) directing another person (the drawee or payor) to pay a certain sum of money on demand or at a definite time to a third person (the payee) or to bearer. * A check is the most common example of a draft. — also spelled draught. — aka bill of exchange; letter of exchange. Cf. NOTE (1). [1]
1. An order in writing by one person on another to pay a sum of money therein specified to a third person on demand or at a future time therein stated. 11 Am 12d B & N § 14.
A term completely synonymous with “bill of exchange.” See State v Di Nocla, 163 Ohio St 140, 56 Ohio Ops 185, 126 NE2d 62.
A term preferable to bill of exchange in the connotation of commercial paper. UCC § 3-104(2)(a).
An arbitrary deduction from the gross weight of an imported article, formerly employed in customs offices to assure the importer that he was not prejudiced by the scales used. 21 Am J2d Cust D § 87; sometimes spelled “draught.”
A copy of an instrument, such as a will, otherwise known as a first draft, from which the executed instrument was drawn. A rough copy of a plan for the construction of a building or other structure.
A bank draft is a bill of exchange drawn by a bank; where drawn upon another bank, it has the same general effect as a check drawn by an ordinary person. 11 Am J2d B & N § 14. See overdraft; selective draft. [2]
1. An order in writing by one person on another (commonly a bank) to pay a specified sum of money to a third person on demand or at a stated future time. EXAMPLES: a check; a bill of lading a warehouse receipt.
See bank draft. [3]
bill of exchange:
[loan translation of French billet de change]
1. An unconditional written order by one person to another, signed by the maker, requiring the person addressed to pay to a third party a specified sum on demand or at a fixed or ascertainable future time; DRAFT (1). [1]
1. A written order of one party upon another for absolute payment of money to a third or designated party, or to his order or to bearer, upon demand or at a specified or determinable future time. 11 Am J2d B & N § 13.
The term is equated with “draft” by the Uniform Commercial Code and is completely synonymous with “draft,” even apart from the Code. 11 Am J2d B & N § 13.
See check. [2]
1. Same as draft. [3]
Excerpt from Steward Kyd’s A Treatise on the Law of Bills of Exchange and Promissory Notes (2d ed. 1811):
“A bill of exchange. . . may be defined, to be an open letter of request, addressed by one person to a second, desiring him to pay a sum of money to a third, or to any other to whom the third person shall order it to be paid: or it may be payable to bearer.” [4]
Excerpt from Joseph Story’s Commentaries on the Law of Bills of Exchange (Edmund Hatch Bennett ed., 4th ed. 1860):
“A Bill of Exchange derives its name from a phrase, familiar in the language of Continental Europe, and most probably derived from that of France, in which it is called ‘Billet de Change,’ or ‘Lettre de Change.’ In the Middle Ages, the word Concambium was used to express the particular contract, known in our law by the name of exchange, that is to say, a transmutation of property, from one man to another, in consideration of some price or recompense in value, such as a commutation of goods for goods, or of money for money. Hence, among foreign Jurists, the phrase, Cambium reale vel manuale, is often used to express the latter contract whereas the contract by which one man, in consideration of a sum of money received in one place, entered into an engagement to pay him the like sum in another, was commonly called by the name of Cambium locale, mercantile, trajectitium.” [5]
Excerpt from Charles Phelps Norton’s Handbook of the Law of Bills and Notes (4th ed. 1914):
“A bill of exchange is usually called among business men a ‘draft.’ When duly accepted, it is called an ‘acceptance.’
‘Anglo-American law classifies bills of exchange as either inland or foreign. According to English law an inland bill is one which is both drawn and payable within the British Islands (or both drawn and addressed to a drawee resident therein). Any other bill is a foreign bill. in the states of the United States similar definitions are accepted. Each state defines an inland bill as one both drawn and payable within its boundaries. For the purpose of the definition of a foreign bill, each state regards all other states of the Union, as well as foreign nations, as independent sovereignties. Accordingly, a bill which is both drawn and payable in one state is an inland bill by the law of that state, but a foreign bill by the law of every other state, notwithstanding its inland character in the state where it is drawn and payable. There is, therefore, no third class of ‘foreign inland bills.’” [6]
Related Terms:
drawer – someone who directs a person or entity, usually a bank, to pay a sum of money stated in a draft or bill of exchange (i.e. a person who writes a check). UCC § 3-103(a)(5).
drawee – the person upon whom a draft or bill of exchange is drawn; the person to whom the paper is presented for acceptance and payment (the drawee of a check is always a bank).
Various Types of Drafts:
bank draft: (1835) A draft drawn by one financial institution on another.
bearer draft: See bearer check under CHECK.
clean draft: (1939) A draft with no shipping documents attached.
documentary draft: (1922) 1. A payment demand conditioned on the presentation of a document, such as a document of title, invoice, certificate, or notice of default. Also termed documentary demand for payment. 2. A negotiable or nonnegotiable draft with accompanying documents, securities, or other papers to be delivered against honor of the draft.
export draft: (1921) A draft drawn by a domestic seller on a foreign buyer, directing the buyer to pay the trade amount to the seller or the seller’s bank.
foreign draft: (1870) A draft drawn in one country or state but payable in another. — aka foreign bill of exchange; international bill of exchange.
inland draft: (1855) A draft drawn and payable in the same state or country.
order draft: See order check under CHECK.
overdraft: See OVERDRAFT.
sales draft: (1910) A draft drawn on a purchaser of goods proportioned to their price and insuring payment for them. — aka sales bill; sales bill of exchange.
share draft: (1978) A demand that a member draws against a credit-union share account, payable to a third party. * A share draft is similar to a check that is written to draw funds out of a checking account at a bank.
sight draft: (1842) A draft that is payable on the bearer’8 demand or on proper presentment to the drawer. — aka demand draft.
time draft: (1847) A draft that contains a specified payment date. UCC § 3-108. — aka time bill.
trade draft: A draft that instructs a commercial enterprise or its agent to pay the amount specified. [1]
References:
Disclaimer: All material throughout this website is compiled in accordance with Fair Use.
[1]: Black’s Law Dictionary Deluxe Tenth Edition by Henry Campbell Black & Editor in Chief Bryan A. Garner. ISBN: 978-0-314-62130-6
[2]: Ballantine’s Law Dictionary with Pronunciations
Third Edition by James A. Ballantine (James Arthur 1871-1949). Edited by William S. Anderson. © 1969 by THE LAWYER’S CO-OPERATIVE PUBLISHING COMPANY. Library of Congress Catalog Card No. 68-30931
[3]: Ballantine’s Law Dictionary Legal Assistant Edition
by Jack Ballantine (James Arthur 1871-1949). Doctored by Jack G. Handler, J.D. © 1994 Delmar by Thomson Learning. ISBN 0-8273-4874-6.
[4]: Steward Kyd, A Treatise on the Law of Bills of Exchange and Promissory Notes 3 (2d ed. 1811).
[5]: Joseph Story, Commentaries on the Law of Bills of Exchange 5 2, at 2 (Edmund Hatch Bennett ed., 4th ed. 1860).
[6]: Charles Phelps Norton, Handbook of the Law of Bills and Notes 31-32 (4th ed. 1914).
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