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Legal Tender Laws

What is a legal tender?

Legal tender is an instrument or medium of payment that the law or a legal system considers a valid means to settling a financial obligation. Legal tender is anything that, as a payment, terminates or extinguishes a debt. Paper currency and coins fall into the category of legal tender whereas personal checks and credit and debit cards fall into the category of non-cash methods of payment amd are generally not considered legal tender. This is because in this type of payment, the obligation of debt is not immediately discharged since payment is deferred.

I owe fines to a court but as per Article 1Ssection 10 of the Constitution, the state will accept only gold and silver coins as payment of debt. Does this mean paper money is not legal tender and I am immune from paying the fine?

A moral and ethical citizen of the U.S. should repay any debt in a timely fashion. Currency or paper money issued by U.S. government is considered legal tender as it has been certified by the U.S. government. The constitution of the U.S. also grants a right to the U.S. government to create legal tender in a way that suits the public good. The above facts thereby indicate that you are not immune to repaying your fine/debt.

I own a silver certificate purchased in 1989. Banks are unwilling to cash it. What are my options?

As on March 25, 1964, C. Douglas Dillon, Secretary of Treasury deemed silver certificates could no longer be redeemable against silver dollars. This decision followed the Act of June 4, 1963 which permitted silver certificates to be exchanged for silver bullion until June 24, 1968, the deadline set by the Congress. The reason for this decision was because there were approximately three million silver dollars in the vault at the Treasure Department that had yet to be claimed. These coins had numismatic value, so they were valuable to collectors and people interested in antiques. There was no means of distributing these coins equitably to the silver certificate holders. Hence since June 24, 1968, there has been no obligation to exchange silver certificates for silver dollars.

Silver certificates are still considered legal tender and they continue to circulate at face value. However they may have numismatic value depending on their age and condition. A possible option for someone who holds a certificate and wishes to get more for it than face value would be to try and sell it to a coin collector or through an auction house.

I signed a contract for an event to be held after a year and wrote a deposit check for it. Can I change the mode of payment from a check to a credit card? Does this have any legal ramifications?

The contract would need to specifically mention credit cards are not acceptable means of payment. If this is not the case, other means of legal tender should be acceptable means of payment. Some vendors charge an additional fee to allow a payee use credit cards, usually around 3%. If the check is deposited, you would need to contact the bank to put a “stop payment” on the check and you would also need to bear the associated charges for this.

Is it legal for a university to accept only credit or debit cards at the food courts and decline cash?

Many institutions, including courts, private institutions, and universities, commonly stipulate a means of payment as long it is not discriminatory by nature. This is usually done for security reasons and is considered legal. Some universities could limit the legal tender they accept. For example, some accept only cash while others could accept credit cards that they control and maintain.

Can city authorities instruct any merchant on how his/her business should be run as well as what form or type of payment they should accept?

It would be considered unconstitutional if the city ordains the form of payment to be received by merchants or vendors. The right of the municipality would be limited to ensure that the merchants maintain, document, and record all purchases. Only the federal government has the sole authority and power to create as well as declare currency standards. In most cases, cash is considered legal tender for all debts.

We engage in barter of goods and currency on a daily basis. These transactions fall under the purview of legal tender law. This law governs currency, as well as bullion related matters. In order to get clarity on questions related to currency or complex matters such as bullion, Experts may be able to guide you with the right information.
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