Well Shyam, Legal tender or forced tender is payment that, by law, cannot be refused in settlement of a debt (debtor cannot successfully be sued for non-payment).[1] Legal tender is a status which may be conferred on certain examples of money, which may depend on circumstances including the amount of money. The term "legal tender" is also sometimes used to refer to the money or currency itself holding that status (see below).

Legal tender has various legal definitions in different jurisdictions. Cheques, credit cards, debit cards and similar non-cash methods of payment are not generally defined as legal tender. Only specific coin and note examples of cash money are usually defined as legal tender. Some jurisdictions may, by law, forbid or otherwise restrict payment made other than by legal tender. For example, such a law might outlaw the use of foreign coins and bank notes, or require a license to perform financial transactions in a foreign currency.

In some jurisdictions, a currency holding the status of legal tender can be refused as payment if no debt exists prior to the time of payment (for example, where the obligation to pay arises substantially contemporaneously with the offer of payment). Consequently vending machines and transport staff do not have to accept the largest denomination of banknote for a single bus fare or bar of chocolate. Shopkeepers can reject large banknotes — this is covered by the legal concept known as invitation to treat. However, restaurants that do not collect money until after a meal is served would have to accept that legal tender for payment of the debt incurred in purchasing the meal.

The right, in many jurisdictions, of a trader to refuse to do business with any person means a purchaser cannot demand to make a purchase, and so declaring a legal tender other than for debts would not be effective.

http://en.wikipedia.o rg/wiki/Legal_tender

Answered by Hemant Kumar , an ibibo Master, at 5:15 PM on October 01, 2008

the expression legal tender the word tender means “offer,” as when an individual tenders his resignation.

The term tender with reference to money arose out of actions of creditors against debtors in English courts. A debtor could “tender” to the creditor the amount he or she thought was owed to the creditor.

If the creditor thought the sum tendered unacceptable, the debtor could deposit the sum with the court, which would decide if the tender met the debtor’s obligation.

The legal-tender quality of a unit of money can be restricted. The American colonies issued paper money that was acceptable for the payment of public debts, but not private debts. The colonial governments committed themselves to accepting the money in payment of taxes, but did not require private creditors to accept it in payment of debts. Currently in the United States the dime is legal tender for all debts up to $10.

English sovereigns arrogated to themselves the privilege of coining money and stipulated penalties for refusing to accept the king’s coinage at face value.

Orders from the crown went so far as to require the acceptance of pennies that had been halved and demanded that anyone refusing to accept half pennies should be seized for contempt of the king’s majesty, imprisoned, and exposed to public ridicule in a pillory.

Although the English government threw the full weight of its sovereign power behind its coinage, disputes between creditors and debtors continued to raise questions, leaving with the courts the final authority for establishing the legal-tender quality of money.

An important court case in 1601, The Case of Mixt Monies, set the legal-tender quality of money on firm footing when it demonstrated that creditors had to accept in payment for debts the money that was legal tender when the debt was paid, as opposed to the money that was legal tender when the debt was incurred.

Answered by Om Prakash , an ibibo Master, at 7:09 PM on September 30, 2008

The coins issued under the authority of Section 6 of The Coinage Act, 1906, shall be legal tender in payment or on account i.e. provided that a coin has not been defaced and has not lost weight so as to be less than such weight as may be prescribed in its
case: - (a) coin of any denomination not lower than one rupee shall be legal tender for any sum, (b) half rupee coin shall be legal tender for any sum not exceeding ten rupees, (c) any other coin shall be legal tender for any sum not exceeding one rupee [Section 13 of The Coinage Act, 1906].

Similarly, the One Rupee notes issued under the Currency Ordinance, 1940 are also legal tender and included in the expression Rupee coin for all the purposes of the Reserve Bank of India Act, 1934.

Every banknote issued by Reserve Bank of India (Rs.2, Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1000) shall be legal tender at any place in India in payment or on account for the amount expressed therein, and shall be guaranteed by the Central Government, subject to provisions of sub-section (2) Section 26 of RBI Act, 1934

Answered by Vipan Thapar , an ibibo Master, at 4:36 PM on September 28, 2008

Legal tender or forced tender is payment that, by law, cannot be refused in settlement of a debt (debtor cannot successfully be sued for non-payment).[1] Legal tender is a status which may be conferred on certain examples of money, which may depend on circumstances including the amount of money. The term "legal tender" is also sometimes used to refer to the money or currency itself holding that status (see below).

Legal tender has various legal definitions in different jurisdictions. Cheques, credit cards, debit cards and similar non-cash methods of payment are not generally defined as legal tender. Only specific coin and note examples of cash money are usually defined as legal tender. Some jurisdictions may, by law, forbid or otherwise restrict payment made other than by legal tender. For example, such a law might outlaw the use of foreign coins and bank notes, or require a license to perform financial transactions in a foreign currency.

Answered by Seema , an ibibo Master, at 11:39 AM on September 28, 2008

Money is legal tender when creditors are legally obliged to accept it in payment of debts. The words “This note is legal tender for all debts, private and public,” appears on all Federal Reserve Notes, meaning that these notes are acceptable in payment of taxes or other obligations owed to the government and also that creditors must accept the notes in payment of all private debts.

In the expression legal tender the word tender means “offer,” as when an individual tenders his resignation. The term tender with reference to money arose out of actions of creditors against debtors in English courts. A debtor could “tender” to the creditor the amount he or she thought was owed to the creditor. If the creditor thought the sum tendered unacceptable, the debtor could deposit the sum with the court, which would decide if the tender met the debtor’s obligation.

The legal-tender quality of a unit of money can be restricted. The American colonies issued paper money that was acceptable for the payment of public debts, but not private debts. The colonial governments committed themselves to accepting the money in payment of taxes, but did not require private creditors to accept it in payment of debts. Currently in the United States the dime is legal tender for all debts up to $10.

For more information-
http://e-articles.inf o/e/a/title/What-is-Legal-Tender/

Answered by Nagendra , an ibibo Master, at 7:33 AM on September 28, 2008