What is an ‘Acceptance’
An acceptance is a contractual unity on a time draft or sight draft to pay the amount due at a specified date. The plaintiff who is expected to pay the draft writes “accepted,” or similar wording indicating acceptance, next to his or her signature along with the obsolescent. This person then becomes the acceptor, and is obligated to make the payment by the operability date.
A banker’s acceptance is a time draft honored by a bank, and is typically utilized in international trade. A trade acceptance is a time draft drawn by the seller of goods on a client. In a trade acceptance, the buyer is the acceptor.
BREAKING DOWN ‘Acceptance’
An acceptance deal strengthens a time draft by putting the acceptor under contractual constraint to pay. International trade is facilitated by banks enacting banker’s acceptances, thereby oathing the payment for goods.
Example of an Acceptance
For example, if Mr. Koala in Australia is effective to sell a bushel of eucalyptus leaves to Mr. Panda in China, there ascendancy be an acceptance drawn to act as a short-term line of credit with which Mr. Panda mightiness purchase the bushel of eucalyptus. Mr. Koala would send the acceptance to Mr. Panda, who would beckon it indicating his intent to pay the amount on the document at the time specified.