What is a demand draft?

A demand draft refers to a type of payment mechanism that is essentially a check that does not require a remittance document to accompany it. This form of payment is typically used in transactions where the payer authorizes the payee to withdraw funds directly from their account.

In this context, the essential characteristic of a demand draft is its ability to facilitate a single payment. Unlike other payment instruments that may involve additional documentation or contractual obligations, a demand draft streamlines the process by allowing a straightforward transfer of funds without the need for accompanying receipts. This simplicity makes it particularly useful in various financial and commercial transactions.

The other options represent different financial concepts that do not apply to the definition of a demand draft. For instance, a check with a scannable document attached would include additional documentation which is not a feature of a demand draft. A contract for future payment obligations suggests a commitment over time rather than an immediate transfer, while a type of loan agreement involves a borrowing mechanism rather than a payment transaction. Thus, the true essence of a demand draft aligns with the notion of a single payment check without accompanying documentation.