Mulch-Rite Inc., based in Germany, has contracted with a company in Italy to export twenty tons of mulch. Mulch-Rite has written an order requesting that the Italian company pay €15,000 by June 15 prior to the shipping date. This order is an example of a
A) bill of lading.
B) draft.
C) letter of credit.
D) counterpurchase.
E) buyback.

Question

Quizplus · Accepted Answer

A draft is a written order by one party (the exporter) to another party (the importer) to pay a specified amount by a certain date. In this case, Mulch-Rite's order for the Italian company to pay €15,000 by June 15 is an example of a draft.