Drawer confusion

Hmm … I find that one difficult to reconcile

In practice I can see that Peter MIGHT prepare the bill of exchange before passing it to Gordon

Gordon would then sign it in the capacity as drawer and send the signed bill, as an instruction to CCC Gordon’s Bank (the drawee), to Peter.

To be doubly cautious, Peter (the payee) may then send it to CCC Gordon’s Bank for acceptance (by signature) so Gordon’s Bank changes their nomenclature from drawee to acceptor and, following acceptance, will return the document to Peter

Peter may now ‘sit’ on the bill and wait until it matures some time in the near future or may alternatively cash it (for a slightly discounted figure) in order to receive the benefit of the money on a date earlier than the maturity date shown on the face of the bill

A further action that Peter could take is to, by his signature, negotiate the bill on to some third party that is one of Peter’s payables. In that situation, Peter’s nomenclature changes from payee to indorser and the payable becomes the indorsee

But I see no situation where Peter, the payee, could be classified as the drawer

You have either misread the question, or the answer … possibly!

Hope that helps

You’re welcome