As of 2005, banknotes were legal tender for all payments, and $1 and $2 coins were legal tender for payments up to $100, and 10c, 20c and 50c silver coins were legal tender for payments up to $5. These old silver coins were legal tender until October 2006, after which only the new 10c, 20c and 50c coins introduced in August 2006 remained legal. [29] Between 1861 and 1874, a number of other banks, including the Bank of New Zealand, the Bank of New South Wales, the National Bank of New Zealand and the Colonial Bank of New Zealand, were incorporated and authorized by Parliament to issue gold-backed notes, but these notes were not legal tender. Legal tender is any form of payment recognized by a government that is used to settle debts or financial obligations, such as tax payments. National currencies such as the US dollar are legal tender. In the United States, the Treasury is authorized to create dollars and distribute them to the public. Federal Reserve notes and coins are legal tender in the United States In 1964, the Reserve Bank of New Zealand Act established that only notes issued by the Reserve Bank were legal tender. The Act also ended the right of individuals to redeem their banknotes for coins, thereby eliminating the distinction between coins and banknotes in New Zealand. The Act came into force in 1967 and established as legal tender all banknotes of five dollars in New Zealand dollars and above, all decimal coins, predecimal pence, shilling and guilder. The Decimal Currency Act, which created the basis for a decimal currency introduced in 1967, was also passed in 1964. Legal tender is anything that is recognized by law as a means of paying a public or private debt or fulfilling a financial obligation, including tax payments, contracts, and fines or damages. The national currency is legal tender in virtually all countries.
A creditor is required by law to accept legal tender to repay a debt. Legal tender is determined by a law that determines the thing to be used as legal tender and the institution authorized to produce and deliver it to the public, such as the United States Department of the Treasury in the United States and the Royal Canadian Mint in Canada. In the United States, the recognized legal tender consists of Federal Reserve notes and coins. Creditors are required to accept it as an offer of payment to settle a debt; However, unless prohibited by state law, private companies may refuse to accept some or all forms of cash offers unless a transaction has already taken place and the customer has not been at fault. In order to comply with the legal definition of „legal tender“, the exact amount due must be offered; No changes can be requested. [40] The most notorious states are Saudi Arabia and Pakistan, where death is an acceptable remedy. In 1933, the Coinage Act allowed certain New Zealand coins and stripped British coins of legal tender. In the same year, the Reserve Bank of New Zealand was established. The bank has been given a monopoly on the issuance of legal tender. The Reserve Bank has also provided a mechanism for other legal tender issuers to phase out their banknotes.
These notes were to be converted into British legal tender upon application to the Reserve Bank and remained so until the notice of suspension of the Sterling Exchange of 1938, which repealed the provisions of an amendment to the Reserve Bank of New Zealand Act 1936. On 8 November 2016, Prime Minister Narendra Modi announced that the existing INR 500 and INR 1000 notes would no longer be accepted as legal tender in order to combat counterfeiting, tax evasion and the shadow economy. [27] The Reserve Bank of India has described a system whereby holders of such notes can either deposit them into their bank accounts for the full and unlimited value or exchange the notes for new ones, subject to a cap. [28] On the other hand, gold or silver coins are not necessarily legal tender if they are not fiat money in the jurisdiction where they are offered in payment. The Coinage Act of 1965 states (in part): Demonetization is currently prohibited in the United States, and the Coinage Act of 1965 applies to all U.S. coins and currencies, regardless of age. The closest historical equivalent in the United States, outside of Confederate silver, was from 1933 to 1974, when the government banned most private property of gold bullion, including gold coins held for non-numismatic purposes. Now, however, surviving gold coins from before 1933 are legal tender under the 1964 law. Although the Reserve Bank Act 1959 and the Currency Act 1965 stipulate that Australian notes and coins are legal tender, Australian notes and coins do not necessarily have to be used in transactions, and refusing to accept payments as legal tender is not illegal. It appears that a service provider is free to determine the commercial conditions under which payment is made before the conclusion of the „contract“ of the supply or service. If a supplier of goods or services specifies other means of payment before the contract is concluded, there is generally no obligation to accept legal tender as payment. This is the case even if it is an existing debt.
However, refusing to accept legal tender to settle an existing debt if no other means of payment/settlement has been determined in advance could have consequences in legal proceedings. [15] [16] However, there are some exceptions. In 2018, in the face of devastating hyperinflation, Venezuelan President Nicolas Madura ordered all federal institutions to accept a new electronic currency, the Petro, as legal tender. The Venezuelan Petro is centrally controlled by the Venezuelan government based on its own assessment of the value of its natural resources. It has been claimed that the Petro is backed by Venezuela`s natural gas, mineral and oil reserves. However, Venezuela`s experience with the Petro has not progressed much, and the Petro, despite its status as legal tender, does not generally circulate in the form of currency. Banknotes and coins can no longer be legal tender if they are replaced by new banknotes of the same currency or if a new currency is introduced to replace the previous currency. [6] Examples: U.S. coins and currencies (including Federal Reserve notes and circulation notes from Federal Reserve banks and national banks) are legal tender for all debts, public duties, taxes, and duties. Foreign gold or silver coins are not legal tender for debts. Legal tender is the national currency of a nation.
It prohibits the use of any other currency. Legal tender must be accepted by creditors as payment of debts. Only government institutions such as the U.S. Department of the Treasury in the United States and the Royal Canadian Mint in Canada can issue legal tender. In the United States in particular, Federal Reserve notes and coins are legal tender and are marked as such. Some currencies, such as the US dollar and euro, can be used as legal tender in other countries. The 1¢ and 2¢ coins were withdrawn from circulation in February 1992, but are still legal tender. [15] Legal tender is a form of money that courts must recognize as a satisfactory payment for monetary debts. [1] Each jurisdiction determines what is legal tender, but it is essentially anything that extinguishes the debt when it is offered („offered“) to pay a debt.
The creditor is not obliged to accept the payment offered, but the act of offering payment in legal tender releases the debt. On June 8, El Salvador became the first country in the world to adopt Bitcoin as legal tender. No country has ever used Bitcoin or any other cryptocurrency as legal tender, and challenges abound. The small Republic of the Marshall Islands (RMI) has also announced that it will introduce a new cryptocurrency, the Sovereign, as legal tender. The state will be tied to an existing, decentralized peer-to-peer cryptocurrency market. Currently, the U.S. dollar acts as currency and legal tender in the RMI and will continue to do so alongside the new legal tender when the government begins issuing states. The Swiss franc is the only legal tender in Switzerland. Any payment of up to 100 Swiss coins is legal tender; Banknotes are legal tender for any amount. [32] In some jurisdictions, contract law may take precedence over legal tender, allowing merchants, for example, to specify that they do not accept cash payments.
[2] Coins and banknotes are generally defined as legal tender in many countries, but personal cheques, credit cards and similar cashless payment methods are not. Some jurisdictions may include a particular foreign currency as legal tender, sometimes as exclusive legal tender, or at the same time as their local currency. Some jurisdictions may prohibit or restrict payments from non-legal tender. [ref. necessary] In some jurisdictions, legal tender may be rejected as payment if there is no debt before the time of payment (the obligation to pay may arise at the same time as the offer to pay). For example, vending machines and transport personnel are not required to accept the highest face value of the ticket. Merchants can refuse large banknotes, which falls under the legal concept of invitation to treatment. [clarification needed] In 1914, the Banking Amendment Act gave legal tender status to the banknotes of any issuer and removed the requirement that banks authorized to issue banknotes must exchange them for gold on demand (the gold standard).
In general, Canadian dollar bank notes issued by the Bank of Canada and coins issued under the Royal Canadian Mint Act are legal tender in Canada.
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