What a draft letter looks like comes down to a short list of visible signals: a “DRAFT” watermark across the page, bracketed placeholder text like [Client Name] or [Insert Date], blank or unsigned signature lines, tracked changes and reviewer comments, and a version number below 1.0. Any one of these tells you the document is still being worked on and has not been approved for sending.
The Markers on the Page
The clearest signal is a label the author put there on purpose. The word “DRAFT” or “CONFIDENTIAL DRAFT” typically appears as a diagonal watermark across each page, or printed in the header or footer. That watermark exists so no one treats the document as final or circulates it prematurely. Some organizations add a date or version number next to the label so reviewers know which iteration they are reading.
Placeholder text is the next giveaway. Brackets around phrases like “[Client Name],” “[Insert Date],” or “[Specific Amount]” mean someone still has to fill in a detail. “TBD” scattered through a section means a decision hasn’t been made yet. These aren’t formatting quirks. They’re deliberate flags that the content is incomplete.
Look at the signature block too. A draft often has an empty signature line, or only a typed name with no handwritten signature above it. Letterhead may be missing, replaced by a plain header. Spacing can be uneven, fonts mismatched, and paragraphs may trail off mid-thought. The tone sometimes shifts between sections because different people contributed and no one has done a final editorial pass.
Signs in the Digital File
If you are looking at the document on a screen, open it in its native editor rather than a flattened PDF. Tracked changes are among the strongest indicators of a draft: colored strikethroughs, inline insertions, and margin notes from multiple reviewers all point to an active editing process. Reviewer comments in the margin do the same.
Metadata can tell you even more. Fields like “last modified date,” author history, and edit counts show how many people have touched the file and when. A document with dozens of recent edits and multiple contributors is almost certainly still in motion.
What a Final Letter Has That a Draft Doesn’t
Knowing what a finished letter looks like makes the contrast obvious. A completed business letter follows a predictable layout. The sender’s address sits at the top, often on printed letterhead. The date comes next, then the recipient’s name, title, and address, then a formal greeting. Body paragraphs deliver the message. A closing like “Sincerely” wraps it up, and the sender signs by hand in the space between the closing and their typed name. Four blank lines are typically left for that signature.
A final letter reads as one cohesive voice. The formatting is consistent throughout, every placeholder has been resolved into real text, and the signature is actually there. If you compare a document in front of you to that picture and several pieces are missing, you are looking at a draft.
Version Numbers Below 1.0
Organizations that manage documents carefully use version numbers to separate drafts from final copies. A common convention labels the first draft as Version 0.1, with each revision ticking up by a tenth: 0.2, 0.3, and so on. When the document is approved as final, it jumps to Version 1.0. If that final version later needs revision, the new drafts restart the decimal cycle at 1.1, 1.2, and so on, until the next approved version is released as 2.0.
The rule of thumb: any version number with a decimal below 1.0 is a draft. A whole number means the document has been approved.
Why It Matters Whether It’s a Draft
Identifying a document as a draft usually means it carries no binding force. A “DRAFT” label signals that the parties have not reached final agreement, and courts treat that label as strong evidence that no binding commitment was intended. The same goes for letters marked “subject to contract” or “for discussion purposes only.”
The label alone isn’t bulletproof, though. If a draft contains all the essential terms of a deal and both parties act as though those terms are binding, a court could find that a contract was formed anyway. The question courts ask is whether the parties intended to be bound: whether both sides performed under the terms, whether anyone objected to the draft status, and whether negotiations continued or everyone just proceeded as if the deal were done.
So don’t assume a draft is consequence-free because it says “DRAFT” at the top. If you receive one that contains specific commitments and you start performing under those commitments without pushing back, you can create an enforceable obligation through conduct.
What to Do With a Draft You Receive
Once you’ve confirmed the document is a draft, how you respond depends on what it is.
For a draft contract or letter of intent, read every term and respond with your edits or objections in writing. Silence can be read as agreement, especially if the other side starts performing under the draft terms. If you disagree with something, say so explicitly and in a format you can prove later.
For a draft demand letter from an attorney, consult your own lawyer before responding. The draft may be a deliberate preview meant to give you a chance to settle before the formal version is sent. Your reply at that stage can shape the entire negotiation.
For internal drafts sent to you for review, focus on substance over formatting. Flag factual errors, missing information, and anything a recipient could misread. Pay particular attention to whether every placeholder has been replaced. Sending a letter with “[Client Name]” still in the body is one of the most common and embarrassing mistakes in professional practice.
Keep the draft. Don’t delete earlier versions. Version history can become important later if a dispute arises about what was agreed to, when changes were made, or who approved specific language.