Legal Tender

Currency issued by authority of a government that may be lawfully tendered in payment of a debt. Includes paper money, Federal Reserve notes, or coins. Must be accepted by a creditor if offered in payment of a debt. The pertinent portion of U.S. Law is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled “Legal tender”, which states: “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.” Therefore, all United States currency identified in the statute are a valid and legal offer payment for debts when tendered to a creditor. There is not, however, a Federal statute mandating that a private business, a person or an organization must accept currency or coins for payment of goods and services. Private businesses are free to develop their own policies on whether or not to accept legal tender unless there is a State law which states otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency as a matter of policy.

Reference:

Malone, J.A (2015). Glossary of Bitcoin Terms and Definitions. United States: Lulu Press, Inc

 

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