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Simple English definitions for legal terms
time draft
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A quick definition of time draft:
A time draft is a written order that tells someone to pay a certain amount of money on a specific date. It's like a check, but with a set due date. There are different types of drafts, like a demand draft that can be paid right away, or a foreign draft that is paid in a different country. Drafts can also be used in the military to enlist people, or in drafting a document or selecting someone for a job.A more thorough explanation:
Definition: A time draft is a written order signed by one person (the drawer) directing another person (the drawee or payor) to pay a certain sum of money on a specified date to a third person (the payee) or to bearer.
Example: A company in the United States sells goods to a company in Japan and sends a time draft to the Japanese company's bank. The time draft instructs the bank to pay the amount specified on a specific date to the U.S. company or to the bearer of the draft.
This example illustrates how a time draft is used in international trade to ensure payment at a future date.
Other types of drafts:
- Sight draft: A draft that is payable on demand or on proper presentment to the drawer.
- Documentary draft: A payment demand conditioned on the presentation of a document, such as a document of title, invoice, certificate, or notice of default.
- Foreign draft: A draft drawn in one country or state but payable in another.
- Inland draft: A draft drawn and payable in the same state or country.
Note: A check is the most common example of a draft.