Cambridge Encyclopedia » Cambridge Encyclopedia Vol. 45

legal tender - Legal tender in Australia, Legal tender in Canada, Legal tender in the Eurozone

money denomination amounts notes

Forms of money that a creditor is bound to accept in settlement of a debt. Some money, such as coin or small denomination notes, may be legal tender only for amounts up to a limit. Other money, such as large denomination notes, is not legal tender for smaller amounts, as nobody is legally required to give change. The point of having a definition of legal tender is to avoid uncertainty as to when a debtor has offered payment. In the past, under the UK Truck Acts, for the protection of employees it was required that they be paid in legal tender. The vast majority of actual transactions in a modern economy are in fact carried out by the use of cheques, credit or debit cards, or electronic transfer, none of which are legal tender. This, however, is for convenience and at the recipient's discretion; nobody is legally obliged to accept a cheque.

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