Legal Tender

[DSYoungEsq]

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?
Paying with rolls of coins
Legal Tender
Can You Legally Turn Down a $50 Bill?

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

and in Scotland: 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.