Distinguish between sight and usance drafts.
Answers
The differences between sight and usance drafts are as follows-
Sights drafts refer to documents are which are easily handed over to the importer once the person has no issue to sign the draft.
On the other hand, usance drafts stand for documents which are handed over to an importer only after the acceptance of the bill of exchange.
One of the vital differences is that in case of sight drafts, payments are made at the time when the draft is issued while in the case usance drafts payment is made on the expiration of a period which is generally specified.
Answer:
Sight Draft__
Meaning: Sight Draft is a type of bill of exchange wherein the drawer of the bill of exchange instructs the bank to hand over the relevant documents to the importer only against payment.
Payment: Immediate payment is made by the importer to the exporter on receiving the documents of title.
Usance Draft__
Meaning: Usance Draft is a type of bill of exchange wherein the drawer of the bill of exchange instructs the bank to hand over the relevant documents to the importer only against acceptance of the bill of exchange.
Payment: The importer undertakes to make payment to the exporter at the end of a specified period.