The term "draft" refers to the act of composing or writing a document. In a legal context, it also describes an unconditional written order, such as a check. This order is signed by one person and directs another to pay a specified amount to a third party, either on demand or at a designated time. This type of document is often referred to as a bill of exchange or letter of exchange.
In legal practice, a draft is commonly used in various areas, including finance and contracts. It is essential in transactions involving checks, promissory notes, and other financial instruments. Users may encounter drafts when dealing with banking, business agreements, or personal transactions. With the right tools, such as templates from US Legal Forms, individuals can create legally sound drafts themselves.
Here are a couple of examples of abatement:
1. A small business owner writes a draft check to pay a supplier for goods received. The check directs the bank to pay the supplier a specific amount upon presentation.
2. (Hypothetical example) A person drafts a promissory note agreeing to pay a friend $500 within 30 days, specifying the payment terms and conditions.
| Term | Definition | Key Differences |
|---|---|---|
| Draft | A written order directing payment. | Unconditional and specific in payment direction. |
| Check | A specific type of draft used for payment. | Checks are always drafts, but not all drafts are checks. |
| Bill of Exchange | A written order to pay a specified amount. | Similar to a draft, but often involves three parties. |
If you need to create a draft, consider using templates available through US Legal Forms to ensure compliance with legal standards. If your situation involves complex financial transactions or legal obligations, it may be beneficial to consult a legal professional for tailored advice.
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| Attribute | Details |
|---|---|
| Typical Fees | Varies by bank or institution |
| Jurisdiction | Applicable in all states |
| Possible Penalties | Fees for bounced drafts, potential legal action for non-payment |
A draft is a broader term that encompasses any written order for payment, while a check is a specific type of draft used primarily in banking transactions.