Definition of demand draft

written order directing that payment be made, on sight, to a third party. The person writing the draft is called the drawee; the bank making the payment is the drawer, or the payor bank. The beneficiary of a demand draft, the person receiving the payment, is the payee. Drafts may be payable at some future date (time drafts) or on sight (demand drafts). Demand drafts drawn on banks are known as checks.