Talk:Legal tender

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some euro dollar bearing the word "not legal tender" ,please explain.

where did you see euro coins/banknotes bearing it? Gugganij 10:58, 16 Sep 2004 (UTC)

Legal tender laws were originally known as "Forced Tender". Googling for "forced tender" reveals this.

Something about "legal tender" previously being called "forced tender" should be included in the main text.

Octothorn 08:27, 16 Sep 2004 (UTC)

Contents

[edit] Legal tender vs "bankability"

As well as legal tender, there is the concept of whether or not a bank is required to accept certain money for deposits - I'm not sure what the word(s) for this are. For example, it is my understanding that Scottish banknotes, while not being legal tender in England, must be accepted by English banks. Is this right? If so, should the article mention the distinction? EdDavies 20:54, 25 August 2006 (UTC)

[edit] US dollars used in Canada

A previous version said that a significant amount of business in Canada is transacted in US dollars. This doesn't jibe with my experience (living in Alberta, very close to the US border, for 40 years). I've seen US dollar investment accounts at the banks, service industries accepting US dollars at a posted exchange rate (less often now), and nothing else. I've never seen Canadian individuals or corporations choosing US dollars for transactions unless they have some US tie. I changed the expression "significant amount of business" to "some business".


[edit] Legal tender in Scotland

There is a concept of legal tender in Scotland. When they existed, Bank of England £1 notes were legal tender. The Scottish Parliament says [1]

Under this narrow legal definition Scottish banknotes have never, even in Scotland, except for two very short periods during the two World Wars, been legal tender. Bank of England banknotes are also not legal tender in Scotland under this definition. Only coins from the Royal Mint are legal tender in Scotland and even these are subject to limitations, e.g. £1 worth of 1pcoins is legal tender but £1.01 is not. £1 and £2 coins are legal tender in Scotland to unlimited amounts. --Henrygb 09:18, 27 July 2005 (UTC)

Ah, yes. You're right. I've misunderstood my sources; it is not that legal tender does not exist at all, it is just that reasonable settlements must be accepted as well. I've altered the article to reflect this.

[edit] Legal tender in India

Is the Indian rupee legal tender alongside the national currencies (which are pegged to the rupee) in both Nepal and Bhutan? Just checking. Man vyi 11:06, 11 August 2005 (UTC)

The Indian rupee is also legal tender in Bhutan. I don't think it is in Nepal, but it may be exepted as legal tender. Zntrip 00:52, 15 August 2005 (UTC)
I have no idea on the status of the Indian rupee anywhere. However you need to be clear about the meaning of legal tender as described in this article. It has a specific meaning. The fact that a currency may be widely or universally accepted doesn't necessarily mean it's legal tender since it has a specific meaning related to the laws of the country. The situation in Scotland is a good example where there is NO legal tender. Nil Einne 21:08, 24 May 2006 (UTC)
Good point. The mere fact that a particular kind of money is universally accepted in a particular country as currency does not mean that the money has legal tender status in that country. We're talking about two separate concepts. See other dicussions below. Famspear (talk) 20:03, 28 February 2008 (UTC)

[edit] Legal tender in the United States

the article quotes federal law ("...shall be legal-tender for all debts, public and private..."), then goes on to say that "In this regard legal tender laws do not pertain to voluntary transactions." that doesn't square. can anybody explain these opposing statements? thanks. SaltyPig 01:32, 29 August 2005 (UTC)

IANAL, but... I think the classic example is a restaurant.
1) You go into McDonalds, give your order, they say "that's ten dollars", you try to pay in cash and they don't accept it.
2) You go into a slightly more upscale joint, eat your meal, they say "that's a hundred dollaes", you try to pay in cash and they don't accept it.
In case 1) you haven't made the transaction, so there is no "debt" - if you walked away you wouldn't have recieived any food, so you don't owe them anything. In this case, they can refuse the money because there isn't this debt. However, in case 2), you have eaten their food already - you blatantly owe them money, and it was a legitimately created debt. They're obliged to take your money.
This interpretation may be flawed - I'm not experienced in American law - but I think it gets the gist across. The key is that there has to be a debt, and in a lot of cases (like trying to buy things from people) it's very hard to create a debt - buying something, where they retain ownership until paid, is a case where you're never "indebted" to the seller. On the other hand, "voluntary transactions" is probably a confusing way to phrase it. Does that help? Shimgray 02:00, 29 August 2005 (UTC)
thanks. i don't necessarily agree that example 1 isn't a debt (depending on timing and other issues), and i personally consider a debt to occur on both sides when an agreement is made (one for goods/service, the other for currency), but i realize american law is quite arbitrary and, supposedly, "settled". ha! thanks for your explanation. i modified the section a bit, but i think ultimately it'll never square, and that most discussions of it step around the problem (definition of debt) a little too obviously. SaltyPig 02:19, 29 August 2005 (UTC)
The matter of when a debt is created is a pretty complex one, and I suspect you need a first-year civil law course to understand it, but the restaurant example is as good a one as I can come up with. Perhaps the difference between a bus and a taxi? No debt is incurred climbing on a bus and trying to pay the driver; however, a debt is incurred by riding in a taxi and then trying to pay the driver. If memory serves, it's one of the key differences between Scottish and English law; in Scotland an offer to sell is binding, and in England it's not; in the one case asking to buy is incurring a debt, the other not. I believe the US generally holds the latter approach, though you never know what weird legal exceptions exist in random states. Shimgray 02:53, 29 August 2005 (UTC)
i think you misunderstand me; i'm not faulting your examples, but rather the pitiful state of "law" in the united states (and other places, of course). BTW, first-year law courses only teach one to regurgitate, not understand — and the pattern continues far beyond law school for most "lawyers". SaltyPig 04:43, 29 August 2005 (UTC)

SaltyPig's comments: First year law school courses only teach one to "regurgitate," not understand?????? Hmmmm. I disagree, and I suspect most law schools are the opposite. The law school I attended was certainly very different from college. In many law schools -- at least in regular, full time day programs at ABA-accredited law schools -- there is virtually nothing of what SaltyPig is describing. Not only that, but you don't have "textbooks" or "lecture" in the sense that I think college students know those concepts. You're buried in original study of actual texts of court cases and statutes and other primary sources, and class is conducted using the Socratic method, not lecture. Nothing is spoon fed. And you aren't memorizing rules and regurgitating them in the sense I assume SaltyPig means. Anyway, I guess my experience is quite different from that of SaltyPig. Famspear (talk) 17:53, 28 February 2008 (UTC)

[edit] precise equivalent values

precise equivalent values= is precise the right word here?--Gbleem 20:00, 20 December 2005 (UTC)

[edit] debt, gift

Culled:

"... the restaurant is not in debt, it has been given a gift."

No. The restaurant was first in credit. A large bank note has been tendered for payment of the customer's debt. No gift has occurred and the restaurant does now owe the change, it is not a gift, even if the change cannot be paid now. Paul Beardsell 20:22, 30 December 2005 (UTC)

[edit] Change

I've been searching but cannot find any information about the following scenario, which I'll illustrate with an example. Suppose you receive a traffic ticket and thus are indebted to the county for $55. You show up to court with a $100 bill. The court says you must bring exact change so won't take payment in the form of a $100 bill. If the fine were $100, they'd be happy to take it. So the issue is not whether they will take the large bill, but whether they have to be able to provide change. What law, if any, covers this scenario?

Several posibilities. Firstly the court may be breaking the law. Secondly many legal tender laws have limits on the ways and means of payment. For instance in many juristictions you can't use an excessive number of small denomination coins to pay a large debt. There is a restriction on how many small coins can be used. See the following link as an example: [2] Terjepetersen 12:02, 9 June 2006 (UTC)
Generally, the recipient is not required to "make change." I don't have a citation to a specific law on that, but at least in the United States I believe that's the general rule. Famspear (talk) 20:06, 28 February 2008 (UTC)
I suspect it's true. They would of course be legally required to accept your $100 bill for the debt, but in doing so they may require you to forfeit any balance owing. Presuming you don't want to lose out on $45 it would be your resonability to ensure you provide them exact legal tender Nil Einne (talk) 20:38, 2 May 2008 (UTC)

[edit] Exact Change Only/Accepting only Certain Denominations

http://www.ustreas.gov/education/faq/currency/legal-tender.html has the following Q&A: "Question: I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?

Answer: The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy." --64.113.81.179 11:52, 9 June 2006 (UTC)

I think the key to the above discussion is the difference between goods and services that have not yet been provided and antecedent debt (a debt that already exists). Those are two very different things. Again, if you haven't even received the goods or services yet, you (generally) do not yet owe a debt to pay for those goods and services -- so the "legal tender" rule does not even apply. The business can simply say, "We accept only checks. We'll be glad to provide the goods and services, but if you want our goods and services, give us a check" or "We accept only pink stuffed toy elephants. If you want our goods and services, give us pink stuffed toy elephants."
By contrast, if the business does not specify anything beforehand (and let's say it's a restaurant in the United States, for example) and you go in and order the meal, then you go to check out with exact change Federal Reserve notes and U.S. coins, the restaurant cannot refuse those items in payment -- without adverse consequences to the restaurant.
I haven't researched this, but I recall hearing somewhere that if the restaurant refuses payment, the debt -- and it's now an antecedent debt -- may be legally discharged. I'm not sure about this part, though. Yours, Famspear (talk) 17:34, 28 February 2008 (UTC)

[edit] Northern Ireland?

The UK section seems to have a paragraph missing: legal tender in Northern Ireland. The situation for NI is clearly similar to Scotland (except that both Northern Irish AND Scottish banknotes are in common circulation, in addition to Bank of England notes). Can someone fill in the legal details? Mtford 19:40, 26 October 2006 (UTC)

[edit] United States

In the US section the limits on the use of coin seem to come from Canadian law [3]. They may also apply in Australia and other countries. However, after a brief search I cannot find any definitive information for the US. Could someone more familiar with the subject please add an appropriate reference or revise the section? 137.65.157.18 19:30, 20 June 2007 (UTC)Anonymous Coward

[edit] Australia

The australia bit is a bit confusing as it dosn't mention the $1,$2 coins properly. if you have a look here http://www.ramint.gov.au/about_ram/faq.cfm at Q13 it explains it a bit better. Peachey88 (Talk Page | Contribs) 06:35, 24 December 2007 (UTC)

[edit] US Coins legal tender limit?

When were the legal tender aspects of the acts/laws of 1873, 1866, & 1864 overturned?. I know those laws were still in effect as of 1930 as per Neil Carothers book "Fractional Money: A history of small coins and fractional paper currency of the United States" but I can't find any information inbetween 1930 and 1965. Basically as of 1930, the Feb 12, 1873 law (or act or whatever) had all the silver coins as legal tender up to $10, the May 16, 1866 law (or act or whatever) had the nickel as legal tender up to 25cents, and the April 22, 1864 law (or act or whatever) had the penny as legal tender up to 25 cents. Was it the 1965 currency act that specifically overruled them? and if so where can I find the full text of that? Thank you.

Gecko G (talk) 10:48, 17 February 2008 (UTC)

[edit] Odd statement regarding Jefferson

I find the following odd material in the article:

In 1798, Vice President Thomas Jefferson wrote that the federal government has no power “of making paper money or anything else a legal tender,” and he advocated a constitutional amendment to enforce this principle by denying the federal government the power to borrow. [footnote] Jefferson, Thomas. Letter to John Taylor (November 26, 1798), reprinted in The writings of Thomas Jefferson, Volume 4, page 260 (1859). [end footnote]

I haven't read the Jefferson letter, but the part about proposing an amendment to enforce the prinicple "by denying the federal government the power to borrow" is confusing. The power to borrow money and the power to designate a particular currency as legal tender for antecedent debts are two different things. A rule that would say "the government cannot borrow money" would not prevent the government from making a rule that says "currency X shall be legal tender". So I'm unclear on what is intended by this verbiage.

The concept of "currency" or "current money," the concept of "legal tender," and the concept of "government borrowing money" are all separate concepts.

Comments, anyone? Famspear (talk) 16:36, 28 February 2008 (UTC)

Oh, and on the term "legal tender," yes it is confusing because the term is used really in three different senses: First, the status of the money, as mentioned in the article. Second the physical act of offering the money, and third, the money itself.

Status: The money has the "status of legal tender" in the sense that the law affords the money the status of being useful in forcing a creditor to accept the money in satisfaction of an antecedent debt.

Physical act of tender: In law, a "tender" is the act of making an unconditional offer to perform, coupled with a manifested ability to carry out that offer, coupled with production of the subject matter (for example, the money) that is the subject of the offer (i.e., as in "see, here's the money!"). See, generally Steven H. Gifis, Barron's Law Dictionary, p. 477 (2d ed. 1984). So a legal tender is a special kind of tender: a tender that cannot be refused by the creditor as satisfaction of an antecedent debt (i.e., cannot be refused by the creditor without adverse consequences to the creditor).

The money itself: Under the U.S. statute quoted in the article, for example, the money itself is called "legal tender."

Dictionary definition: Legal tender: "money that is lawfully acceptable for payment of a debt or obligation where the medium of payment is not specified by the statute or agreement [ . . . ]". Steven H. Gifis, Barron's Law Dictionary, p. 267 (2d ed. 1984). All legal tender is money, but not all money is legal tender. Id.

Maybe some of this can form the basis for edit to the article. Yours, Famspear (talk) 17:16, 28 February 2008 (UTC)

[edit] UK coins legal tender

Would someone please consider the following revision. In accordance with the Coinage Act 1971, UK gold coins are legal tender for any amount. The sovereign, double sovereign and quintuple sovereign are covered by the current revision which states that £1, £2, and £5 coins are legally tenderable for any amount. However, the 'half sovereign' is a valid coin with a face value, I believe, of 50p. Therefore, this wording should be added to the section about coins OK for any value 'and gold half sovereigns which have a face value of 50p'. Of course, spending any sovereign at face value would be a very silly thing to do, as it's bullion value is many times greater. —Preceding unsigned comment added by 213.120.84.226 (talk) 08:48, 6 March 2008 (UTC)

Why does this section mention retail outlets not accepting 25p coins? Legal tender is about settling debt, not day-to-day retail transactions. 213.83.125.109 (talk) 11:50, 29 May 2008 (UTC)

[edit] Scotland

This doesn't make sense:

"Bank of England notes are the only banknotes that are legal tender in England and Wales. [...]

"Scottish notes are legal tender everywhere in the UK"

If only Bank of England notes are legal tender in England, then Scottish notes can't be legal tender in the entire UK. —Preceding unsigned comment added by 81.132.83.55 (talk) 09:32, 7 March 2008 (UTC)

Now reverted to "Scottish notes are not legal tender anywhere in the UK". Well spotted, thanks. Man vyi (talk) 09:53, 7 March 2008 (UTC)