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Legal tender

This article is about the payment medium. For the song, see Legal Tender (song).

Detail of the obverse of a Series 1950 United States ten-dollar bill, showing the phrase "This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury, or at any Federal Reserve Bank." This phrase was subsequently shortened in later issues to "This note is legal tender for all debts, public and private."

Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt.[1] Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in payment of a debt extinguishes the debt. There is no obligation on the creditor to accept the tendered payment, but the act of tendering the payment in legal tender discharges the debt.

It is generally only mandatory to recognize the payment of legal tender in the discharge of a monetary debt from a debtor to a creditor.[2] Sellers offering to enter into contractual relationship, such as a contract for the sale of goods, do not need to accept legal tender and may instead require payment using electronic methods, foreign currencies or any other legally recognized object of value.[1][3][4][5]

Coins and banknotes are usually defined as legal tender in many countries, but personal cheques, credit cards, and similar non-cash methods of payment are usually not. Some jurisdictions may include a specific foreign currency as legal tender, at times as its exclusive legal tender or concurrently with its domestic currency.

  1. ^ a b Cite error: The named reference Royal Mint was invoked but never defined (see the help page).
  2. ^ Paul M. Horvitz, Monetary Policy and the Financial System, p. 14, Prentice-Hall, 3rd ed. (1974).
  3. ^ Cite error: The named reference rbalegaltender was invoked but never defined (see the help page).
  4. ^ "The euro as legal tender". European Commission. Retrieved 30 April 2024.
  5. ^ "legal tender". Legal Information Institute. Cornell Law School. June 2020. Archived from the original on 6 April 2024.

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