Drafts/Transmittal Letters

• Drafts/Transmittal Letters
• Sight Draft 

Drafts are widely used as instruments for payment in international trade.  As a negotiable instrument they must be signed by the drawer, be payable on demand (at sight), contain an unconditional order to pay a specified amount of money, and be endorsed either to the drawer or the drawer’s bank.

REGULATORY FACTS

Form Facts:

• Unz Stock No.:   W20-015

Common Errors to Avoid:

• Drafts do not specify either “at sight” or “time”.
• Currency of collection not specific.
• Letter of credit required documents not same as specified on transmittal letter.
• Not specifically endorsed either to drawer’s bank or drawer.

Sight drafts require that the amount stated be paid by the drawer before shipping documents related  to the transaction are released.  A draft drawn on and accepted by a bank results in a Banker’s Acceptance.

In some instances, the merchandise can be turned over to the buyer before payment, under a Trade Acceptance. A factor to consider with a Trade Acceptance is that the exporter is exposed to more risk than with a Sight Draft because the buyer has already received the goods. 

REGULATORY FACTS

Form Facts:

• Unz Stock No.: W20-030, W20-075

Common Errors to Avoid:

• Make sure that the currency of settlement of the draft is the same as the sales contract specifies.  

Draft/Transmittal Letters
Cat. No.	Description
W20-015	4-part snap sets
Sight Drafts
W20-030	bond sheets
W20-075	4-part snap sets