Drawee Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Drawee, written in plain English, along with examples of how it is used.
What is Drawee?
n. The person who is to be paid the bill of exchange or check.
History and Meaning of Drawee
The term "drawee" has its origins in banking and finance. It is a legal term used to describe the party who is obligated to make payment on a bill of exchange or check that has been presented for payment. The drawee is typically a bank, financial institution, or other party that has been authorized to make the payment on behalf of the person or entity in question. The term can be found in legal documents such as contracts or agreements, where the drawee is identified as a party that has a specific responsibility in relation to a financial transaction.
Examples of Drawee
A company writes a check to a vendor for goods or services. The vendor presents the check to their bank, which becomes the drawee. The drawee is responsible for verifying the check and making payment to the vendor.
A customer applies for a letter of credit from their bank in order to pay for goods that have been ordered from an overseas supplier. The bank becomes the drawee and is responsible for making payment to the supplier once the goods have been shipped and the necessary documentation has been provided.
A person deposits a check from their employer into their bank account. The bank becomes the drawee and is responsible for verifying the check and making payment to the person.
Legal Terms Similar to Drawee
Drawer - The party that initiates the transaction by creating the bill of exchange or check.
Payee - The party that is entitled to receive payment from the drawee.
Endorser - The party that endorses the bill of exchange or check, allowing it to be transferred to another party.