Sight Draft

AAA

DEFINITION of 'Sight Draft'

A type of bill of exchange, in which the exporter holds the title to the transported goods until the importer receives and pays for them. Sight drafts are used with both air shipments and ocean shipments for financing transactions of goods in international trade. Unlike a time draft, which allows for a short-term delay in payment after the importer receives the goods, a sight draft is payable immediately.

INVESTOPEDIA EXPLAINS 'Sight Draft'

A shortcoming of sight drafts is that if the importing country disallows the shipment or the importer is unable to pay for the shipment when it arrives, the exporter will not get paid and will be responsible for return shipping or disposal costs. Sight drafts must be accompanied by a letter of credit and other required documents, such as an ocean bill of lading, in order to be paid.



RELATED TERMS
  1. Tariff

    A tax imposed on imported goods and services. Tariffs are used ...
  2. Certificate Of Origin - CO

    A document declaring in which country a commodity or good was ...
  3. General Order - GO

    A status given to imported goods that are missing the proper ...
  4. Export

    A function of international trade whereby goods produced in one ...
  5. Import

    A good or service brought into one country from another. Along ...
  6. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
Related Articles
  1. In Praise Of Trade Deficits
    Economics

    In Praise Of Trade Deficits

  2. NAFTA's Winners And Losers
    Economics

    NAFTA's Winners And Losers

  3. Material Adverse Effect A Warning Sign ...
    Markets

    Material Adverse Effect A Warning Sign ...

  4. Footnotes: Early Warning Signs For Investors
    Retirement

    Footnotes: Early Warning Signs For Investors

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

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