Legal Definition and Related Resources of Bank Draft

An instrument of one bank drawing upon its deposits with another bank. See Perry v West, 266 A.2d849, 110 N.H. 351.

A draft addressed to a bank.

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Bank Draft in Historical Law

You might be interested in the historical meaning of this term. Browse or search for Bank Draft in Historical Law in the Encyclopedia of Law.

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What does Bank Draft mean in American Law?

The definition of Bank Draft in the law of the United States, as defined by the lexicographer Arthur Leff in his legal dictionary is:

A check drawn by a bank on another bank in which it maintains an account. Since a bank is likely to have a pretty good bank account, its check is more acceptable to a creditor than his debtor”s and thus many transactions call for payment by bank draft or by certified check or cashier”s check. In addition, it is often stipulated in transactions involving large sums that payment be made in funds in the payee”s locality so as to preclude his having to wait several days for the check to clear (during which period the money is earning no one anything). Hence if a contract between a California buyer and a New York seller calls for payment in “New York funds,” the buyer, to comply, may have his California bank draw a check on its account in a New York bank.