23 Nov Money Vs Legal Tender
In 1933, Congress amended the law so that all U.S. coins and currencies (including Federal Reserve notes), regardless of when they were issued, constitute “legal tender” for all purposes. Federal and state courts have since repeatedly ruled that Federal Reserve notes are also legal money. Milam v. U.S., 524 F.2d 629 (9th Cir. 1974), is typical of federal and state court cases where Federal Reserve notes are considered “legal tender.” In the Milam case, the U.S. Court of Appeals for the Ninth Circuit considered a verdict denied to a person who wanted to buy back a $50 Federal Reserve note for “legal money.” The U.S. offered Milam $50 in Federal Reserve notes, but Milam rejected the notes, saying the “legal tender” should be gold or silver. The Ninth Circuit noted that nearly a century earlier, the U.S. Supreme Court in Legal Tender (Juilliard v.
Greenman), 110 U.S. 421 (1884), had dismissed this request as frivolous and upheld the decision. 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] Money is legal tender but may not be accepted by retailers and is worth much more than its face value due to its rare value and silver content. Recently, however, the country`s financial situation has deteriorated.
Salvadoran President NayibBukele`s excessive support for Bitcoin is heavily criticized by many. Despite the cryptocurrency`s poor performance last month, the president bought an additional 500 bitcoins, falling behind on paying the country`s debt. Overall, the situation looks bleak for El Salvador, with Bitcoin being accepted as the country`s offer. There are different forms of legal tender that are accepted in the United States. In 1862, the U.S. government passed the Legal Tender Act, which allowed printed dollar bills as official currency in the country. The government gave this act to finance the civil war. However, it is of paramount importance today because the USD is the most used currency in the world.
Cent coins are also legally accepted in the United States. The Decimal Currency Act 1970 regulated legal tender prior to the introduction of the euro and contained provisions similar to those laid down in UK law (all taken from earlier UK legislation), namely: coins over 10 pence were legal tender for payments not exceeding £10, coins of up to 10 pence were legal tender for payments not exceeding £5, and the bronze coins were legal tender for a payment not exceeding 20 pence. Throughout the United Kingdom, the 1 pound, 2 pound and 5 pound sterling coins are legal tender in unlimited quantities. Twentypence coins and fifty pence coins are legal tender in quantities not exceeding 10 pounds; Fivepence notes and tenpence notes are legal tender up to £5; and the cent and twopence coins are legal tender up to 20 pence. [38] Under the Currency Act 1971,[39] gold sovereigns are also legal tender for any amount. Although not specifically mentioned on them, the face values of gold coins are 50p; £1; £2; and £5, a fraction of their value in gold bars. The five-pound coins, although legal tender, are intended to serve as souvenirs and are almost never seen in circulation. On the other hand, unlimited legal tender accepts money as payment, up to any amount. As a rule, in such cases, the beneficiaries offer banknotes as payment for the clearing of any amount.
A legally accepted offer plays different roles, such as a store of value, a measure of value or a unit of account in an economy. Here are some additional facts that underline its importance: legal tender was introduced for the first time in the French Penal Code of 1807 for gold and silver coins (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). In the 19th century, gold coins were legal tender of any amount, but silver coins were not legal tender for sums greater than 2 pounds or bronze for sums greater than 1 shilling. This provision was retained in a revised form with the introduction of decimal money, and the Currency Act 1971 stipulated that coins over 10 pence became legal tender for the payment of up to £10, non-bronze coins with not more than 10 pence legal tender for the payment of no more than £5. and bronze coins having legal tender for the payment of not more than 20 pence. The main purpose of this law is to ensure national acceptance of the U.S.
currency in accordance with constitutional language, which reserves to Congress the power to create a single currency of equal value to all the United States. Although the law provides that U.S. currency is legal tender and can be accepted for the payment of debts, it does not require the acceptance of cash payments, nor that the acceptance of cash cannot be restricted. [48] This also applies to paper money issued by the Confederate States of America during the American Civil War. Confederate currency became worthless on its own terms after the war, as it could not be redeemed until a number of years after the signing of a peace treaty between the Confederacy and the United States (which never happened because the Confederacy was defeated and dissolved). Although the Reserve Bank Act 1959 and the Currency Act 1965 stipulate that Australian notes and coins are legal tender, Australian notes and coins do not necessarily have to be used in transactions, and refusing to accept payments as legal tender is not illegal. It appears that a service provider is free to determine the commercial conditions under which payment is made before the conclusion of the “contract” of the supply or service. If a supplier of goods or services specifies other means of payment before the contract is concluded, there is generally no obligation to accept legal tender as payment.
This is the case even if it is an existing debt. However, refusing to accept legal tender to settle an existing debt if no other means of payment/settlement has been determined in advance could have consequences in legal proceedings. [15] [16] The opposite of demonetization is remonetization, in which some form of payment is restored as legal tender.