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. On this instrument, LNG is
A) the drawee.
B) the drawer.
C) the maker.
D) the trader.

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. On this instrument, LNG is
A) ​the drawee.
B) ​the drawer.
C) ​the maker.
D) ​the trader.

Quizplus · Accepted Answer

LNG is the drawer because they are the party issuing the draft, which is a type of negotiable instrument that orders payment to be made. Mid-state Utility is the drawee because they are the party being ordered to make the payment.

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