Legal Definitions - drawee

A drawee is the party, most commonly a bank, that is instructed by another party (known as the "drawer") to pay a specific sum of money to a third party (the "payee"). This instruction is typically given through a financial document like a check or a draft. In essence, the drawee is the entity that holds the funds and is directed to release them upon presentation of the valid payment instrument.

• Example 1: Paying Rent with a Personal Check

  Imagine Sarah writes a check from her personal checking account to her landlord, Mr. Henderson, for her monthly rent. In this scenario, Sarah is the "drawer" (the one writing the check), and Mr. Henderson is the "payee" (the one receiving the money). Sarah's bank, "City National Bank," is the drawee because it is the institution that Sarah has instructed to pay Mr. Henderson from her account when he deposits or cashes the check.

• Example 2: A Business Paying a Supplier

  Consider "Green Thumb Landscaping," a business that needs to pay "Horticultural Supplies Inc." for a large order of plants. Green Thumb Landscaping issues a check from its business checking account to Horticultural Supplies Inc. Here, Green Thumb Landscaping is the "drawer," and Horticultural Supplies Inc. is the "payee." The bank where Green Thumb Landscaping holds its business account, such as "Community Savings Bank," acts as the drawee, as it is the entity directed to disburse the funds to the supplier.

• Example 3: An Attorney Paying from a Client Trust Account

  An attorney, managing a client's trust account, writes a check to cover a specific expense related to the trust, such as a property tax bill. The attorney, acting on behalf of the trust, is the "drawer," and the county tax office is the "payee." The bank where the client's trust account is maintained, for instance, "Fiduciary Trust Bank," is the drawee. It is the bank that has been ordered to release the funds from the trust account to pay the tax bill.