Also known as: trade drafts · draft
Written by attorneys · grounded in primary & secondary sources — see below
A negotiable instrument by which one party orders a commercial enterprise or its agent to pay a specified sum to the holder or a designated payee.
Select any source to read its text and confirm it supports the definition.
Judge Ramirez receives a request from her brother to prepare a trade draft directing Titan Industries to pay $50,000 to a supplier. She drafts the instrument without compensation and delivers it to her brother for his signature. Because she stops short of representing him in any forum, her conduct complies with the applicable judicial conduct rule.
Travis Tate burns a copy of a trade draft issued by Tundra Resources during a public demonstration against commercial practices. Prosecutors charge him under a statute aimed at protecting the integrity of commercial instruments. The court upholds the statute because the regulation targets conduct rather than expression and advances an important interest unrelated to suppressing speech.
Topaz Mining issues a trade draft ordering TechVista Solutions to pay $75,000 to Tori Taylor. TechVista Solutions is identified on the face of the instrument as the party required to make payment. Under the applicable commercial code definition, TechVista Solutions qualifies as the drawee.
Theodore Tucker signs a trade draft as the party ordering payment from Titan Industries to Taliah Tang. The instrument identifies Tucker by name in the signature block. Under the commercial code, Tucker meets the definition of drawer.
Timothy Tang receives a trade draft from Tundra Resources that contains an alleged misstatement about delivery dates. He claims the statement was material to his decision to accept the instrument. The court evaluates whether a reasonable investor would have viewed the information as significantly altering the total mix of available facts.
Counsel for Titan Industries prepares a trade draft as part of settlement negotiations with Travis Tate. The draft and related communications are placed in a client file. When discovery is sought, the court applies the control-group test to determine whether the communications are protected.
A trade draft specifically directs a commercial enterprise or its agent to pay, whereas other drafts may involve banks or different parties. The UCC definitions of drawer and drawee apply equally once the instrument qualifies as a draft.
Supporting sources
…of the modern law on this issue is contained in the Comment to the ALI's Model Penal Code § 207.11, at 158 and nn. 35-37 (Tent. Draft No. 9, 1959). [^maj-51]: Tr. of Oral Rearg. 20-21. [^maj-52]: Tr. of Oral Rearg. 24. [^maj-53]: We are not aware that in the taking of any census under this clause, a fetus has ever been…