Legal Definitions - sight draft

Definition: A sight draft is 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. It is payable on the bearer's demand or on proper presentment to the drawer.

Example: A check is the most common example of a sight draft. When you write a check, you are directing your bank to pay a certain amount of money to the person or company you are paying. The check is payable on demand, which means the person or company can cash it right away.

Explanation: A sight draft is a type of financial instrument that allows for immediate payment upon presentation. It is commonly used in business transactions, such as when a company needs to pay a supplier for goods or services. The supplier can present a sight draft to the company, which must pay the amount specified on the draft. This ensures that the supplier receives payment quickly and efficiently.