Legal tender is anything that is recognized by law as a means of paying a public or private debt or fulfilling a financial obligation, including tax payments, contracts, and fines or damages. The national currency is legal tender in virtually all countries. A creditor is required by law to accept legal tender to repay a debt. Legal tender is determined by a law that determines the thing to be used as legal tender and the institution authorized to produce and deliver it to the public, such as the United States Department of the Treasury in the United States and the Royal Canadian Mint in Canada. On the other hand, gold or silver coins do not necessarily have to be legal tender if they are not fiat money in the jurisdiction where they are offered as a means of payment. The Coinage Act 1965 states (in part): In 1933, the Coinage Act authorized certain New Zealand coins and stripped British coins of their legal tender. In the same year, the Reserve Bank of New Zealand was established. The bank has been given a monopoly on the issuance of legal tender. The Reserve Bank has also provided a mechanism for other legal tender issuers to phase out their banknotes.
These notes were to be converted into British legal tender upon application to the Reserve Bank and remained so until the notice of suspension of the Sterling Exchange of 1938, which repealed the provisions of an amendment to the Reserve Bank of New Zealand Act 1936. The right of a trader in many countries to refuse to do business with a person means that a potential buyer cannot force a purchase solely by presenting legal tender, as legal tender should only be accepted for debts already incurred. On 8 November 2016, Prime Minister Narendra Modi announced that the existing INR 500 and INR 1000 notes would no longer be accepted as legal tender in order to combat counterfeiting, tax evasion and the shadow economy. [27] The Reserve Bank of India has described a system whereby holders of such notes can either deposit them into their bank accounts for the full and unlimited value or exchange the notes for new ones, subject to a cap. [28] The term « legal tender » comes from the Middle French tendre (verbal form), which means « to offer ». The Latin root is tender (stretching), and the meaning of tender as an offer is related to the etymology of the English word « extend » (hold outwards). [5] From the lender. To make a valid offer, the following conditions are required: An offer is an offer to take or perform an act to which the party to whom the offer is addressed is obliged.3 min read The main purpose of this law is to encourage the nationwide adoption of the U.S. currency, in accordance with constitutional wording, which reserves the power to Congress to create a single currency that has the same value throughout the United States. Although the law provides that U.S.
currency is legal tender and can be accepted for debt repayment, it does not require the acceptance of cash payments, nor does it provide that no restrictions can be placed on the acceptance of cash. [48] Under U.S. federal law, U.S. dollar cash is a valid and legal offer to pay past debts when offered to a creditor. In contrast, federal law does not require a vendor to accept federal currency or coins as payment for goods or services exchanged at the same time. Therefore, private companies can formulate their own policies on whether or not to accept cash, unless state law provides otherwise. [3] [4] According to the Currency Act, there are restrictions on the value of a transaction for which only coins are used. [22] A payment in coins is legal tender for up to the following amounts for the following coin denominations: Demonetization is currently prohibited in the United States and the Coinage Act of 1965 applies to all U.S.
coins and currencies, regardless of age. The closest historical equivalent in the United States, outside of Confederate silver, was from 1933 to 1974, when the government banned most private property of gold bullion, including gold coins held for non-numismatic purposes. Now, however, surviving gold coins from before 1933 are legal tender under the 1964 law. In the case of the euro, notes and coins of the old national currencies were in certain cases legal tender from 1 January 1999 to 28 February 2002. Legally, these notes and coins were considered non-decimal subdivisions of the euro. [ref. needed] Legal tender was introduced for the first time for gold and silver coins in the French Penal Code of 1807 (Art. 475, 11°).
In 1870, legal tender was extended to all banknotes of the Bank of France. Anyone who objects to such coins because of their total value would be prosecuted (French Penal Code, art. R. 642-3). U.S. coins and coins (including Federal Reserve notes and circulation notes of Federal Reserve banks and national banks) are legal tender for all debts, public duties, taxes, and duties. Foreign gold or silver coins are not legal tender for debts. The history of banknotes in New Zealand was much more complex. In 1840, the Union Bank of Australia began issuing banknotes under British law, but these were not automatically legal tender.