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Requiring Acceptance of Legal Tender

Created by dave. Last edited by dave, 16 years and 210 days ago. Viewed 4,286 times. #4
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There must be mutual consent between the retailer and the consumer as to the particular form of payment in order to conclude a transaction. It is the Bank's understanding of the general law in this area that a tender of bank notes as payment does not necessarily compel the party who is owed money to accept that form of payment. The form of payment which is mutually acceptable to the parties to a transaction appears to us to be essentially a matter of private agreement between those parties. For example, a provider of goods or services could insist on payment by credit card or cheque.

The method of payment (e.g. cash, debit or credit card) used in a transaction is a private agreement between the buyer and the seller. Each has the right to accept or refuse a bank note when accepting payment or receiving change.




I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn't this illegal?


The pertinent portion of law that applies to your question 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."

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says 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 (usually notes above $20) as a matter of policy.


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