Future Business Leaders of America (FBLA) Business Law Practice Exam

Who is referred to as the person who orders money to be paid in a draft?

1. Drawer

2. Drawee

3. Payee

4. Endorser

The correct answer is: Drawer

The correct term for the person who orders money to be paid in a draft is the drawer. In the context of a draft, the drawer is the individual or entity that creates and signs the draft, instructing another party (the drawee) to pay a specified sum of money to a designated person (the payee). This role is critical in financial transactions, as the drawer's authorization initiates the payment process. Understanding the roles defined in a draft is vital. The drawee is the party expected to pay the specified amount, typically a bank or financial institution. The payee is the person or entity that receives the money. The endorser, on the other hand, is someone who signs the draft after it has been issued, usually in order to transfer the right to receive the payment to another party. Each of these roles is fundamental in financial transactions, but only the drawer is responsible for originating the request for payment.