Fact Pattern 25-2
LNG Corporation and Mid-state Utility Company enter a contract for a sale of liquefied natural gas. LNG draws a draft unconditionally ordering Mid-state Utility to pay $50,000 to LNG's order in sixty days. Mid-state Utility signs and dates the draft.
-Refer to Fact Pattern 25-2. This instrument is
A) a banker's acceptance.
B) a nonnegotiable instrument.
C) a promissory note.
D) a trade acceptance.

Question

Fact Pattern 25-2
LNG Corporation and Mid-state Utility Company enter a contract for a sale of liquefied natural gas. LNG draws a draft unconditionally ordering Mid-state Utility to pay $50,000 to LNG's order in sixty days. Mid-state Utility signs and dates the draft.
-Refer to Fact Pattern 25-2. This instrument is
A) ​a banker's acceptance.
B) ​a nonnegotiable instrument.
C) ​a promissory note.
D) ​a trade acceptance.

Quizplus · Accepted Answer

A trade acceptance is a draft or bill of exchange drawn by the seller (LNG Corporation) on the buyer (Mid-state Utility Company) for the payment of goods, which the buyer accepts by signing.

Fact Pattern 25-2 LNG Corporation and Mid-State Utility Company Enter a Contract for a Contract