drawee

A drawee is the party to whom a bill of exchange or other negotiable instrument is addressed and who is ordered to pay the specified amount. In a bill of exchange, the instrument is drawn by a drawer on the drawee, who is usually a bank or another financial institution. The drawee becomes liable to pay only if it accepts the instrument; upon acceptance, the drawee assumes primary liability to pay the amount at maturity. If the drawee refuses to accept or to pay when due, the instrument may be dishonoured, and the holder can seek payment from the drawer or endorsers.

In the context of a cheque, the drawee is the bank on which the cheque is drawn. A cheque is an instruction to the drawee bank to pay the stated sum to the payee or order. Because cheques are typically payable on demand, there is usually no formal acceptance by the drawee; instead, the bank honors the presentation if funds are available and may dishonour the cheque for insufficient funds or other reasons.

Relationship to other parties is central to its definition: the drawer is the person who issues the instrument, the payee is the one to whom payment is promised, and the drawee is the party directed to make payment. The drawee’s liability differs from that of endorsers or guarantors and is governed by the applicable law governing negotiable instruments, such as the Uniform Commercial Code in the United States or equivalent statutes in other jurisdictions. In practice, the drawee’s role is foundational to the transfer of money via drafts and cheques, enabling secure, transferable payment orders.