Today at a restaurant I attempted to pay with a $5 bill that was partially torn on one side, and the serial numbers were incomplete. The serial numbers on the other side were there. A manager told me they could not accept the bill without both serial numbers.
I always believed that as long as at least half the bill was intact it was acceptable. Does anyone have any knowledge about this?
It’s technically still legit, but I’m not sure about where you’d go to exchange it for an intact bill – I’m guessing a bank. But just because a bill is legal tender doesn’t mean somebody has to take it; they could just as easily refuse a bill because it has writing on it.
U.S. Treasury Department, frequently asked question: I have some currency that was damaged. . .
So you could have two halves for the price of one?
Are you sure about this? It is my understanding that if something is “legal tender,” then it must be acceptable. “This note is legal tender for all debts, public and private.”
Technically, the formula for determining if a bill is still legal tender is: if 3/5ths of the bill, including one complete serial number, is present the bill is still good. Some banks have a template they can use to determine whether the bill is 3/5ths complete. It’s basically a bill size price of clear plastic marked off in a grid of 50 equal sections. Put the template over the bill and count the number of grids the bill completely fills. If it’s 30 or higher they can exchange the bill.
Bills with less than 3/5ths remaining or bills with no complete serial number may still be redeemable, but only at a Federal Reserve Bank branch.
You can refuse legal tender for many reasons. For instance, I would not accept 1,000,000 loose pennies as payment for my used car nor am I obligated to.
But coins do not carry the label “This is legal tender …”
What are the circumstances in which you can actually refuse legal tender in payment for an obligation.
Ok then, how about a counterfeit bill that states it is “legal tender”? You think I am obligated to accept that as well?
This has been done to death around here. Basically, I can refuse to do business with anyone for any reason (excluding those forbidden by anti-discrimination laws), including that I don’t like the color of their money. I am under no obligation to sell or serve you anything, and may place whatever conditions I want on such sale. This means stores are free to put up signs saying they will not accept bills over a certain denomination, etc.
The restaurant senario is a little different, because they have already served you the food, without having placed a condition on the sale. AFAIK (and IANAL) there is very little case law on this, but the best guess is that the resturaunt is free to refuse that bill, and to ask for another form of payment, but could not succesfully be procecuted or held liable for failure to pay, if you offered legal tender as payment in good faith without intent to defraud. So if all Baby Fish Mouth had was the torn note, the resturaunt would probably be without recourse if they refused it. If Baby Fish Mouth had a perfectly good bill as well, but refused to give it to them instead of the torn one, the resturaunt could try to argue that it had legitimate doubts about the validity of the torn bill, and that BFM’s refusal to substitute another form of payment demonstrated bad faith (either trying to pass off a dubious bill, or cause trouble for the resturaunt, or get off without paying). Whether such an argument would work in court is questionable, but it very well might.
A retailer is not obliged to take damaged/suspicious money. But a bank/the Feds are more obliged to. That’s why the Treasury has people that piece notes together to see if they add up to 51%.
This is, I think, the key to my question. If you have a monetary obligation to someone, under what circumstances may they refuse to accept a genuine bill? Under what circumstances may they claim that you are still indebted?
Ascenray, the answer is: Any circumstances. Please, read my link to Snopes, above.
Ah, I see, Walloon. This is the key –
But, still, I wonder what happens when a service has already been performed or the goods have been consumed and all you have is $50 bills or all you have is a $20 that has a mark on it the merchant doesn’t like? What exactly is the procedure? Straight to court to file a petition for discharge of debts? Can the merchant call the cops to prevent you from leaving? What gives?
Nitpick. As in my initial response, 51% is not technically enough. It has to be 3/5 of a bill, or 60%. In reality, if you submit the bill(s) to the Treasury via mail or through a Federal Reserve Bank branch their experts may well be able to identify the bill with next to nothing to work with. I have seen cases where they identified and redeemed bills:
-damage by fire to the point of a collection of ashes.
-hidden in a pillowcase in a damp basement until the whole thing was one moldy, mildewy glob.
The Treasury is very good at identifying bill fragments, but it’s not guaranteed. The rule is: 60% or more with one full serial number = guaranteed redemption (though you may have to go to the FRB). 59% or no complete serial number = maybe the Treasury can ID the bill and redeem, but no promises.
Many years ago when I washed dishes for a living, I also cleaned up the bar and restaurant in the morning . I usually found a buck or two in loose change which was nice considering I was making about $3 an hour.
One morning I found a few small squares from a torn bill. Bits of hamilton told me I had a ten spot on my hands. Eventually I found about 3/4 of the bill (the floor was unusually clean when I was done that morning 
). I taped it together and asked the bartender to change it for me. He just laughed (I should have tried the next night when Jenny was on). I then tried to buy something at a local minimart. Nobody would take the bill. I took it my bank and even they wouldn’t take it!
Several banks later I found one that directed me to some fossil in the basement. This guy must have worked at the bank since the Roosevelt administration - I believe he had a green visor and shirt sleeve garters.
Well, he took my bill and sent it down to the treasury department in Washington, DC. He told me they would determine how much it was worth. They might deem it is worth $5 or $7.5. He said they usually do this for money burned in a fire. He gave me a receipt for “one mutilated ten dollar bill.” (BTW I have kept the receipt)
About a month later I got a bank check for $10. I converted it to liquid assets that evening.
> But, still, I wonder what happens when a service has
> already been performed or the goods have been consumed
> and all you have is $50 bills? What exactly is the procedure?
It depends on the merchant. I suppose they could have you arrested if they wanted. But, generally, that’s not good for business and is used only if the merchant suspects that you never intend to pay.
The most common and reasonable resolution is for the customer to leave some form of collateral (often a driver’s license) and make appropriate payment later.
And, of course, there’s the old idea of washing dishes for a couple of hours.
Where are you people getting these percentages from? Walloon’s link above pretty clearly states that:
“Clearly more than one-half” does not necessarily mean 51% or 60%, you know. It means >50%.
The concept I have most often seen advanced in answer to the question of why merchants can refuse “legal tender for all debts public and private” is that a purchase is not a debt. When you go up to the register with your trinkets and attempt to pay for them, you have not incurred a debt; you are attempting to make a purchase. Not the same as making a payment on a previously agreed-on loan or contractual amount.