What becomes of a term or date draft once the drawee endorses it?

Once the drawee endorses a term or date draft, it serves as a promissory note. This is because an endorsed draft now contains the drawee's promise to pay the specified amount at a later date. When the drawee adds their endorsement, they are effectively agreeing to the terms laid out in the draft, which transforms it into a recognized form of credit instrument similar to a promissory note.

A promissory note is a legally binding document in which one party (the maker) promises to pay a sum of money to another party (the payee) at a future date. The endorsement by the drawee fulfills the requirement for such a promise, making the document valid as a promise to pay.

In contrast, the other options do not accurately reflect the legal implications of such an endorsement. Voiding the draft would eliminate any obligation for payment, which contradicts the purpose of endorsing it. Returning it to the sender does not create any payment obligation, nor does it utilize the endorsement for financial transactions. Lastly, while it may be converted into a form of cash in specific transactions post-endorsement, it doesn't directly function as cash until it is presented for payment. Thus, identifying the correct role of the endorsed draft as