Acceptance

AAA

DEFINITION of 'Acceptance'

A contractual agreement on a time draft or sight draft to pay the amount due at a specified date. The party who is expected to pay the draft writes "accepted", or similar wording indicating acceptance, next to his or her signature along with the date. This person then becomes the acceptor, and is obligated to make the payment by the maturity date.

A banker's acceptance is a time draft honored by a bank, and is typically used in international trade. A trade acceptance is a time draft drawn by the seller of goods on a buyer. In a trade acceptance, the buyer is the acceptor.

INVESTOPEDIA EXPLAINS 'Acceptance'

An acceptance agreement strengthens a time draft by putting the acceptor under contractual obligation to pay. International trade is facilitated by banks enacting banker's acceptances, thereby guaranteeing the payment for goods.

RELATED TERMS
  1. Pay To Order

    A check or draft that must be paid via endorsement and delivery. ...
  2. Payable Through Draft

    A draft that is payable through a specific bank. Payable-through-draft ...
  3. Banker's Acceptance - BA

    A short-term debt instrument issued by a firm that is guaranteed ...
  4. Maturity Date

    The date on which the principal amount of a note, draft, acceptance ...
  5. Demand Draft

    A method used by individuals to make transfer payments from one ...
  6. Bank Draft

    A type of check where the payment is guaranteed to be available ...
Related Articles
  1. What Is International Trade?
    Personal Finance

    What Is International Trade?

  2. Globalization: Progress Or Profiteering?
    Economics

    Globalization: Progress Or Profiteering?

  3. The Money Market
    Retirement

    The Money Market

  4. What are Business Ethics?
    Investing

    What are Business Ethics?

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center