# Legal Tender **URL:** \ **Category:** Cecil's Columns/Staff Reports\ **Created:** [January 30, 2004, 3:49pm UTC](https://boards.straightdope.com/t/legal-tender/226764 "2004-01-30T15:49:24Z")\ **Posts on this page:** 19\ **Page:** 1
**Author:** ![pbeland](https://avatars.discourse-cdn.com/v4/letter/p/a6a055/32.png) [@pbeland](https://boards.straightdope.com/u/pbeland)\ **Post date:** [January 30, 2004, 3:49pm UTC](https://boards.straightdope.com/t/legal-tender/226764/1 "2004-01-30T15:49:24Z")
I’m surprised someone has already sued over this on one side or the other. God knows there are enough people out there that would love to sink their teeth into this. :rolleyes: ---
**Author:** ![goddessodd](https://avatars.discourse-cdn.com/v4/letter/g/cab0a1/32.png) [@goddessodd](https://boards.straightdope.com/u/goddessodd)\ **Post date:** [January 30, 2004, 10:52pm UTC](https://boards.straightdope.com/t/legal-tender/226764/2 "2004-01-30T22:52:26Z")
> [@pbeland](#): > > I’m surprised someone has already sued over this on one side or the other. God knows there are enough people out there that would love to sink their teeth into this. :rolleyes: Reply to: [http://www.straightdope.com/classics/a1\_330.html](http://www.straightdope.com/classics/a1_330.html) I once paid a telephone reconnection fee in change. I was in the midst of a phone company feud back when there was only ONE phone company. They mistakenly disconnected my service, and while their representative was eager and willing to admit the error, I was informed that, their error or no, the only way to reinstate my service was to pay the reconnection fee ($50) and my outstanding balance ($13.73) by “cash, certified check or money order” in person, in their office. I stopped by the bank, changed bills into coins, and in a fit of white hot fury appeared in their office with a big bag of change. While reluctant to accept it, they eventually caved and pulled three supervisors out of the back to count it. My parting shot was “this is a grassroots movement against the monopoly of the phone company…we will not be satisfied until there are coin hoppers at every customer service window…AND I want a new phone book!” which, surprisingly, earned me a big round of applause from the large and mostly sympathetic onlookers. ---
**Author:** ![mks57](https://avatars.discourse-cdn.com/v4/letter/m/b9bd4f/32.png) [@mks57](https://boards.straightdope.com/u/mks57)\ **Post date:** [January 31, 2004, 9:01am UTC](https://boards.straightdope.com/t/legal-tender/226764/3 "2004-01-31T09:01:38Z")
As it was explained to me, _debts_ is the important word. If I go into the local convenience store and attempt to buy a carton of cigarettes with a jar of pennies, they are free to laugh in my face and refuse the sale. No debt exists. If the telephone company sends me a bill for my telephone service, they are asking for payment of a debt, and must accept legal tender for the payment of the debt. If they refuse, they may not be able to legally collect the debt in court. Supposedly, this dates back to the 19th Century, when paper currency was not very popular. People preferred to be paid in gold and silver. The federal government, which tended to run the printing presses in times of crisis, used the legal tender law as a way of forcing people to accept devalued currency and coinage. ---
**Author:** ![Canadjun](https://avatars.discourse-cdn.com/v4/letter/c/76d3ee/32.png) [@Canadjun](https://boards.straightdope.com/u/Canadjun)\ **Post date:** [January 31, 2004, 4:38pm UTC](https://boards.straightdope.com/t/legal-tender/226764/4 "2004-01-31T16:38:34Z")
In Canada there are limits on how many coins are legal tender. So, you can’t buy a car or pay your tuition with bags of coins (it’s been tried with university tuition as a protest). See [Currency Act](http://www.canlii.org/ca/sta/c-52/sec8%2Ehtml). Something else I found interesting - you can’t destroy coins or use them as other than currency [Section 11](http://www.canlii.org/ca/sta/c-52/sec11%2Ehtml). I guess that means I could go to jail everytime I use a dime as an emergency screwdriver! :eek: ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [February 1, 2004, 11:44pm UTC](https://boards.straightdope.com/t/legal-tender/226764/5 "2004-02-01T23:44:55Z")
> [@mks57](#): > > The federal government, which tended to run the printing presses in times of crisis, used the legal tender law as a way of forcing people to accept devalued currency and coinage. I believe this is inaccurate. Or, at least, only something from recent times. Until the 1930’s, the (US) federal government was still on the gold standard, and any printed currency could be exchanged for actual gold. Perhaps mks57 was misled by some of the ‘information’ spread by tax protesters, saying things like 'You don’t actually owe any taxes, because it isn’t real money that you were paid with", etc. ---
**Author:** ![daveblake](https://avatars.discourse-cdn.com/v4/letter/d/f14d63/32.png) [@daveblake](https://boards.straightdope.com/u/daveblake)\ **Post date:** [February 2, 2004, 12:14am UTC](https://boards.straightdope.com/t/legal-tender/226764/6 "2004-02-02T00:14:58Z")
Three years ago my local costco opened a gas station, and to my dismay refused to accept cash or credit cards other than their own proprietary. They had a “guide” running around the pumps helping people who had trouble with the machines, but apparently decided that running a cash operation was too much trouble. I like cash: it’s easy to carry, and you don’t have to check your account later to make sure you were charged the right amount. So I complained, pulling out my money and making them read the “legal tender” statement. Then I complained to the federal reserve via email, but never got a response. A year later Costco intoduced a cash card you could use for any of their operations (a good way for nonmembers to use the gas station, by the way, if you have a friend buy you a card), and the problem, such as it was, disappeared. Perhaps MKS has it right, that the operative word is “debts”. but it rankled me then and still rankles me that a major American company can get away with refusing greenbacks. Already they’re almost worthless in Europe; I’d like to hold on to _some_thing here at home. By the way, Cecil, if you’re listening, your slogan (“fighting ignorance since 1973; it’s taking longer than we thought”) reminds me of an old (greek?) saying you probably know but if not will find provocative: “Against ignorance, the gods themselves contend in vain.” ---
**Author:** ![mks57](https://avatars.discourse-cdn.com/v4/letter/m/b9bd4f/32.png) [@mks57](https://boards.straightdope.com/u/mks57)\ **Post date:** [February 2, 2004, 5:23am UTC](https://boards.straightdope.com/t/legal-tender/226764/7 "2004-02-02T05:23:31Z")
> [@t-bonham@scc.net](#): > > I believe this is inaccurate. Or, at least, only something from recent times. Until the 1930’s, the (US) federal government was still on the gold standard, and any printed currency could be exchanged for actual gold. I was thinking about the situation during, and after, the American Civil War, when the Union issued paper currency (greenbacks) that was not redeemable for gold, silver or coins. They even stopped minting coins, due to metal shortages. Fractional value paper currency replaced coins. The greenbacks were declared legal tender by federal law. The greenbacks were made redeemable in gold in 1879, after a long political battle over monetary policy. ---
**Author:** ![greenphan](https://avatars.discourse-cdn.com/v4/letter/g/c37758/32.png) [@greenphan](https://boards.straightdope.com/u/greenphan)\ **Post date:** [February 3, 2004, 4:44am UTC](https://boards.straightdope.com/t/legal-tender/226764/8 "2004-02-03T04:44:11Z")
[Snopes.com got to this one too, it appears…](http://www.snopes.com/business/money/pennies.asp) I don’t know if I like the idea that a vendor doesn’t have to accept greenbacks in exchange for services or product because suppose you get a vindictive vendor who wants payment in elephants… Although I suppose it would have to be marked somewhere… ---
**Author:** ![Mbossa](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@Mbossa](https://boards.straightdope.com/u/Mbossa)\ **Post date:** [February 3, 2004, 7:25am UTC](https://boards.straightdope.com/t/legal-tender/226764/9 "2004-02-03T07:25:48Z")
> [@greenphan](#): > > I don’t know if I like the idea that a vendor doesn’t have to accept greenbacks in exchange for services or product because suppose you get a vindictive vendor who wants payment in elephants… In that case, you’d just go down the road to this vendor’s competitor who (hopefully) has a scrap of sanity. That’s the whole thing - vendors can accept any form of payment they want, but if they’re not sensible about it, they are going to lose customers. Here in New Zealand, we seem to have a not insignificant number of Australian 20-cent coins floating around in circulation (in fact, I just noticed one here on the desk in front of me). We also have a few from (I think) Fiji and the Cook Islands. They all happen to be exactly the same size, shape, and weight as New Zealand 20-cent coins, but they have different designs. These are AFAIK not legal tender in New Zealand. However, every vendor I’ve offered them to accepts them (treating them as NZ$0.20). They also work in every slot machine. OTOH, I have never tried to use them to pay off a debt. ---
**Author:** ![tqnohe](https://avatars.discourse-cdn.com/v4/letter/t/bb73d2/32.png) [@tqnohe](https://boards.straightdope.com/u/tqnohe)\ **Post date:** [February 3, 2004, 2:25pm UTC](https://boards.straightdope.com/t/legal-tender/226764/10 "2004-02-03T14:25:33Z")
I get steamed when I walk into a McDonalds in the middle of the day and I am confronted by the sign “We do not accept bills larger than $20” But one time I ordered lunch, about $6.00, and lo and behold all I had was a $50. The cashier dutifully refused my $50. I complained. The manager intervened. Pointing to the sign he said it was store policy. (Why?) Because it’s hard to make change for anything larger. (My, God, the store is taking in money hand over fist.) Also that invites holdups. (Punks will take smaller bills.) Finally I told him that if he didn’t take my bill, I would call the treasury department. (Yeah like that would really have done any good. A BS bluff if I have ever uttered one.) After all, I showed him the "This note is legal tender for ALL debts public and private. The manager uttered a four letter word (and not my last name to be sure) gave me the meal and told me to get out. He still did not take my $50. I still got my lunch. Teehee ---
**Author:** ![DSYoungEsq](https://avatars.discourse-cdn.com/v4/letter/d/c6cbf5/32.png) [@DSYoungEsq](https://boards.straightdope.com/u/DSYoungEsq)\ **Post date:** [February 3, 2004, 2:27pm UTC](https://boards.straightdope.com/t/legal-tender/226764/11 "2004-02-03T14:27:24Z")
This is not the first time we have discussed “legal tender.” Indeed, I believe this is the second time that Uncle Cecil’s “classic” article on the subject has been posted as a “classic” within the last three years. Prior threads in which this subject was discussed include: [A question about money?](http://boards.straightdope.com/sdmb/showthread.php?t=6122&highlight=legal+tender) [Paying with rolls of coins](http://boards.straightdope.com/sdmb/showthread.php?t=12681&highlight=legal+tender) [Legal Tender](http://boards.straightdope.com/sdmb/showthread.php?t=1786&highlight=legal+tender) [Can You Legally Turn Down a $50 Bill?](http://boards.straightdope.com/sdmb/showthread.php?t=23642&highlight=legal+tender) The last thread comes the closest to containing relatively concise and accurate statements of the law. By the way, these are just threads I participated in. I stopped bothering after 2000 because I got tired of repeating myself. 😉 But if you run the search engine (which, now, works quite well!!!), you will see that in the last year, the subject has come up as the main topic of a thread at least five times. I will quote myself from the first thread above. The law on the subject has not changed so far as I can tell. > [@](#): > > This is an interesting question. It would be fun to find a whole answer! > > As far as I can tell, there is no federal law that requires creditors accept from debtors any particular form of money. However, at 51 USC Sec. 5103, it says: > Quote: > > > [@](#): > > > > 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. > > Foreign gold or silver coins are not legal tender for debts. > > Now, in general, the idea of ‘legal tender’ is that it is tender that must be accepted in payment of debt. But the concept has gone fuzzy over the years, as ‘fiat’ money has become accepted without the need to force its acceptance. See, for example, in Australia: [http://www.rba.gov.au/poly/po\_legal.html](http://www.rba.gov.au/poly/po_legal.html) > > and in Scotland: [http://www.scot.demon.co.uk/scotfaq/1\_7.html](http://www.scot.demon.co.uk/scotfaq/1_7.html) . > > I found the following statute in Missouri: > Quote: > > > [@](#): > > > > 408.010. The silver coins of the United States are hereby declared a legal tender, at their par value, fixed by the laws of the United States, and shall be receivable in payment of all debts, public or private, hereafter contracted in the state of Missouri; provided, however, that no person shall have the right to pay, upon any one debt, dimes and half dimes to an amount exceeding ten dollars, or of twenty and twenty-five cent pieces exceeding twenty dollars. > > But this provision is the only indication of ‘legal tender’ in Missouri, and is buried in a chapter of its Revised Statutes that deals with interest and usury. > > The US Constitution allows Congress to “coin Money, regulate the Value thereof,” (Article I, Sec. 8) and the states are prohibited from coining money (Art. I, Sec. 10). Also, no state shall “make any Thing but gold and silver Coin a Tender in Payment of Debts” (Art. I, Sec. 10), presumably the basis for Missouri’s Sec. 408.010. > > If anyone has any statute of which they are aware, and for which they can provide a citation, please do! As near as I can tell, in most of this land of ours, you don’t have to accept any particular form of money for payment of a debt. > > As noted at the Australia site, there may be legal consequences beyond the question of ‘legal tender.’ Thus, if you refuse payment by what is accepted as money, having previously failed to set the terms of what you would accept, you may have difficulty if you were to sue for payment later. In addition, I noted in a later thread Ohio’s law on “legal tender.” > [@](#): > > Ohio doesn’t at present define ‘legal tender’; the subject of payment seems addressed solely by the following: > Quote: > > > [@](#): > > > > §1302.55 > > (A) Unless otherwise agreed, tender of payment is a condition to the seller’s duty to tender and complete any delivery. > > > > (B) Tender of payment is sufficient when made by any means or in any manner current in the ordinary course of business unless the seller demands payment in legal tender and gives any extension of time reasonably necessary to procure it. > > > > (C) Subject to section 1303.61 of the Revised Code, payment by check is conditional and is defeated as between the parties by dishonor of the check on due presentment. There are two traps people fall into in this subject. The first is to accept the assertion that a purchase contract is not a “debt,” and therefore “legal tender” doesn’t apply. A “debt” is “a sum of money due by certain and express agreement.” [_Black’s Law Dictionary_, Fifth Edition, 1979] A contract creates a “debt” whenever there is on the part of one party a promise to pay money as the consideration for the obligation of the other party. As an example, eating the food in a restaurant prepared for you upon your order creates a “debt” requiring that you pay to the restaurant the listed cost of the meal, plus tax. Reduced to the most simple level, going into the local quick mart and placing a newspaper on the counter requesting that the clerk ring you up creates a “debt” for the cost of the paper if the clerk does indeed ring you up. Obviously, the shop owner isn’t going to sue you in court when you don’t ante up the 50 cents. After all, just because it isn’t practical to collect a debt doesn’t mean one doesn’t exist. Indeed, legal tender laws originally DID require acceptance by merchants of the proffered medium of exchange. Thus, the coin of the realm was given a measure of confidence. In the absence of confidence that a coin or bill will be accepted as payment, the coin or bill has little value. Legal tender laws originally were designed to combat the skepticism of the populace that the coinage put out by the monarch would be accepted by shop keepers. Which leads to the other trap many fall into discussing the present day effect of legal tender laws in the United States. It does not appear to be the case in the present that merchants in this country are obligated by law to accept “legal tender.” It is doubtful that the federal government has the authority under the Constitution, even given the coinage and commerce clauses, to force individuals to accept coins and bills in all transactions; states are prohibited from declaring anything other than gold and silver coins “tender” for debts. We don’t use gold or silver coins any more (keep in mind, prior to the late 1800’s, there were very few coins issued by the United States; most coinage in circulation was that of other countries such as England and Spain). Thus, a shop keeper today probably can’t be forced by a court to accept any given United States coin or bill in payment of a sales transaction. And, while it would be interesting to see such a case work through the courts from an intellectual standpoint (I want to see Donald Trump offer to pay his tax bill with Sacajawea dollars!), practically speaking, no one is ever going to bother with this issue. ---
**Author:** ![John\_W.Kennedy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_w.kennedy/32/1031_2.png) [@John\_W.Kennedy](https://boards.straightdope.com/u/John_W.Kennedy)\ **Post date:** [February 3, 2004, 2:47pm UTC](https://boards.straightdope.com/t/legal-tender/226764/12 "2004-02-03T14:47:20Z")
> [@tqnohe](#): > > (Why?) Because it’s hard to make change for anything larger. (My, God, the store is taking in money hand over fist.) Also that invites holdups. (Punks will take smaller bills.) There’s more to it than you understand. Fast-food places, convenience stores, _etc.,_ often have, as an anti-robbery measure, a vault that the manager can put money in, but can’t get it back out of. They keep the amount of cash on hand _very_ low, and changing a $50 bill is a major hassle; in fact, some of them literally do not keep $50 in accessible cash at all. ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [February 3, 2004, 9:18pm UTC](https://boards.straightdope.com/t/legal-tender/226764/13 "2004-02-03T21:18:47Z")
> [@John W. Kennedy](#): > > They keep the amount of cash on hand _very_ low, and changing a $50 bill is a major hassle; in fact, some of them literally do not keep $50 in accessible cash at all. John, I think you’re exaggerating a bit here. Last time I was at my nearest McDonalds, the cash register had trays for $1’s, $5’s, $10’s & $20’s, and there were several bills in each tray. Even if they had only a single bill in each (very unlikely), that’s $36 right there. And this was only 1 of their 6 cash registers. I just can’t believe any McDonalds could function with less than $50 in change available. What if 3 customers in a row bought the cheapest meal @ $3, and paid with a $20? That would require $51 in change right there. I’d check with whatever unnamed source gave you this info, John, and see if something was misinterpreted. Maybe they meant $50 in change per register? But even that seems unrealistic to me. ---
**Author:** ![John\_W.Kennedy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_w.kennedy/32/1031_2.png) [@John\_W.Kennedy](https://boards.straightdope.com/u/John_W.Kennedy)\ **Post date:** [February 3, 2004, 10:36pm UTC](https://boards.straightdope.com/t/legal-tender/226764/14 "2004-02-03T22:36:56Z")
It depends on the store, on the neighborhood, and often on the shift. ---
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [February 4, 2004, 12:22am UTC](https://boards.straightdope.com/t/legal-tender/226764/15 "2004-02-04T00:22:10Z")
> [@t-bonham@scc.net](#): > > I believe this is inaccurate. Or, at least, only something from recent times. Until the 1930’s, the (US) federal government was still on the gold standard, and any printed currency could be exchanged for actual gold. The only banknotes that could be exchanged for gold up until 1933 was a “gold certificate” or “gold coin note” which were backed by gold. Silver certificates were backed by and exchangable for silver dollars. Legal tender notes were backed by Treasury securities. Not sure just what you got for them. ---
**Author:** ![The\_PHB](https://avatars.discourse-cdn.com/v4/letter/t/df788c/32.png) [@The\_PHB](https://boards.straightdope.com/u/The_PHB)\ **Post date:** [February 4, 2004, 12:17pm UTC](https://boards.straightdope.com/t/legal-tender/226764/16 "2004-02-04T12:17:35Z")
Bit of a tangent, I know, but what the heck… When I was a kid, the buses in my home town (Southend-on-sea, England) introduced a sort of automated payment machine. I guess the idea was to speed the buses up by not requiring the driver to have to issue tickets, handle money, give change, etc. Anyway the machines they installed were ingenious though a little unusual. Maybe because this was 30 years ago or so and the technology hadn’t really developed. The machines had big hoppers on the top where you dropped your coins in, but they didn’t actually count the coins - instead, they fed them over some sort of inking device and stamped them against the ticket. So your ticket was essentially just a picture of all the coins you had dropped in. If a ticket inspector got on the bus, he’d have to add it all up himself to work out what you’d actually paid. Of course this was great fun for me and my friends. We’d compete to get the longest ticket, which you could achieve by [a] using lots of coins, or if you were clever \*\* timing the coin drops so that they were spaced out as far as possible on the ticket. (Too long an interval between coins though, and the machine assumed you’d finished.) Here’s where we link back to the thread of this discussion - there was absolutely no limit on how many coins you could use to pay your fare. Bus drivers often wouldn’t take a big handful of coppers, but the machines always would. I think the longest ticket I ever managed was about 8 feet long. Strangely enough, these particular ticket machines didn’t last very long. Maybe it was because they ran out of paper for the tickets so frequently. ---
**Author:** ![gotpasswords](https://avatars.discourse-cdn.com/v4/letter/g/c57346/32.png) [@gotpasswords](https://boards.straightdope.com/u/gotpasswords)\ **Post date:** [February 5, 2004, 6:15pm UTC](https://boards.straightdope.com/t/legal-tender/226764/17 "2004-02-05T18:15:20Z")
Regarding Costco gas stations not accepting cash: > [@Mbossa](#): > > In that case, you’d just go down the road to this vendor’s competitor who (hopefully) has a scrap of sanity. That’s the whole thing - vendors can accept any form of payment they want, but if they’re not sensible about it, they are going to lose customers. If you don’t know what Costco is, you may not be aware that they sell gas for typically 15-20 cents per gallon less than anyone else in the area. They’re a “membership discount warehouse” and if part of the reason they can offer gas far cheaper than anyone else is efficiency in not accepting and handling cash, so be it. They’re not accessible by the general public, and as such, they are also exempt from California law that gas stations must provide air (for tires) at no cost to its customers. As such, they have no air and no squeegees to wash your windshield. Just cheap gas. Another part of their ability to pass along savings is buying in bulk - I have no idea how frequently they need to refill their underground tanks, but there’s always a long, long line curling around the place reminiscent of the “even-odd” rationing days some 30 or so years ago. 50+ cars in line at any given time is not uncommon on weekends. They’re at no risk of losing customers by being inconvenient in some peoples’ eyes for not accepting cash. ---
**Author:** ![Pop1](https://avatars.discourse-cdn.com/v4/letter/p/5fc32e/32.png) [@Pop1](https://boards.straightdope.com/u/Pop1)\ **Post date:** [February 5, 2004, 10:53pm UTC](https://boards.straightdope.com/t/legal-tender/226764/18 "2004-02-05T22:53:55Z")
While we’re on this subject, what’s the rule regarding torn paper money? I’ve been told that as long as you have more than 2/3s of the bill intact, it is still legal tender. Is that right? One time, after buying gas, I had exact change to pay, but one of the bills had about 25% torn off. The station attendant refused to take it and demanded that I give him a complete bill. I told him that it was all that I had and moreover it was legal tender and if he continued to refuse it, I’d drive off not owing him anything since he refused legal tender. He took it. But was I right, or was I full of it? ---
**Author:** ![Tim\_T-Bonham.net](https://avatars.discourse-cdn.com/v4/letter/t/46a35a/32.png) [@Tim\_T-Bonham.net](https://boards.straightdope.com/u/Tim_T-Bonham.net)\ **Post date:** [February 5, 2004, 11:53pm UTC](https://boards.straightdope.com/t/legal-tender/226764/19 "2004-02-05T23:53:08Z")
> [@Pop1](#): > > While we’re on this subject, what’s the rule regarding torn paper money?. . . But was I right, or was I full of it? You were full of it, actually. Technically, anyone can refuse to accept damaged or defaced currency. The Department of the Treasury [see here](http://www.treas.gov/education/faq/currency/sales.html?IMAGE.X=0&IMAGE.Y=0#q1) is the only place that is guaranteed to accept this (and I don’t even know that they are _legally_ required to do so). And it’s not 2/3rds, their standard only requires more than 50% of the bill available & visible to redeem it for full value. Many Federal Reserve Banks will exchange a damaged or defaced bill, too, and even some commercial banks will do it as a service for regular customers. But I don’t think they are _required_ to do this.