$1 bills MUST be accepted to pay any/all debts?

[Thunder]

I just read that all legal American paper currency must be accepted as payment for any and all debts.

Not only that, but if a business or landlord or whatever, refuses to recognize your legal tender as good enough to pay your debts, then the USA no longer recognizes...that debt!!!

So, does that mean that if I try to pay my rent in $1 bills, and the rental agency insists on checks and NO bills, then the govt. will not recognize the debt and I don't have to pay rent????

http://thm-a01.yimg.com/nimage/1f7027972e4e4c64


:p

[kedo1981]

Dream the dream Parky dream the dream

[MikeMangum]

I just read that all legal American paper currency must be accepted as payment for any and all debts.

Not only that, but if a business or landlord or whatever, refuses to recognize your legal tender as good enough to pay your debts, then the USA no longer recognizes...that debt!!!

So, does that mean that if I try to pay my rent in $1 bills, and the rental agency insists on checks and NO bills, then the govt. will not recognize the debt and I don't have to pay rent????

http://thm-a01.yimg.com/nimage/1f7027972e4e4c64


:p

That's why our currency says "legal tender for all debts, public and private" on it. If you offer to pay someone with legal tender, and they refuse to accept it, then they are refusing to accept a legal payment.

"Ok, if that's the way you want it."

You could, if you really wanted to be an ass, offer payment in pennies.

[Thunder]

That's why our currency says "legal tender for all debts, public and private" on it. If you offer to pay someone with legal tender, and they refuse to accept it, then they are refusing to accept a legal payment.

"Ok, if that's the way you want it."

You could, if you really wanted to be an ass, offer payment in pennies.

do businesses have the right to insist on payment in check, CC, or no bills under $20?

how would such a disagreemant be solved?

[Cavemonster]

Yes, but if you have a contract with your landlord that specifies payment terms, they can insist it be paid by check. If the rental contract specifies that you pay in live chickens, that's enforceable too.

[The True Scotsman]

In cases where no contract specifying payment is present and your payment is denied, I don't think your debt will actually disappear. I believe in that case, the person refusing the payment will simply be legally forced to accept the payment you are offering. As well, in this case, you would have to deal with the loss of time involved in going through the legal system, which would take up more than the time it would take to stop at the bank. Plus the person with your debt would hate you. :D

[Blackadder]

I would love being paid in $1 bills. That would totally satisfy my inner Scrooge McDuck

[Madalch]

You could, if you really wanted to be an ass, offer payment in pennies.

Actually, I think there are laws stating that payments in coins for debts over a certain value can be refused.

[Startz]

According to the Treasury, businesses can pretty much decide for themselves what they want to accept.
http://www.ustreas.gov/education/faq/currency/legal-tender.shtml

[PbFoot]

I think it goes something like this:

If there is a larger denomination, then that denomination can be demanded. Eg. If my debt is $10, and I want to pay in 10 ones, the person can demand a ten dollar bill instead.

I've heard some urban legends about people paying their taxes by writing a cheque on the side of a cow though.

-PbFoot

[The True Scotsman]

"I would love being paid in $1 bills. That would totally satisfy my inner Scrooge McDuck"

or inner strip club owner... :p

[Pup]

According to the Treasury, businesses can pretty much decide for themselves what they want to accept.
http://www.ustreas.gov/education/faq/currency/legal-tender.shtml

Yes, near as I can tell, it hinges on what's a debt. From the link (emphasis added): "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."

This actually got applied a bit last year, when the mint was letting people buy almost unlimited amounts of dollar coins, using their credit cards. People used rewards cards and got free flights or cash back.

The usual method was to deposit the coins in a bank and transfer the money from the bank account to pay off the credit card. Problem was that some banks didn't want to accept thousands of dollars of coins for deposit without charging a handling fee.

One way that people could be assured of getting rid of their coins was to pay their credit card with coins in person (like a Citibank Visa at a Citibank branch) because it was payment of a debt, not a bank deposit. The credit card had to accept the coins. They could refuse to loan any more money in the future and cancel the card. But they had to legally accept the coins as payment for that debt.

I think it goes something like this:

If there is a larger denomination, then that denomination can be demanded. Eg. If my debt is $10, and I want to pay in 10 ones, the person can demand a ten dollar bill instead.

Got any cite on that? It never came up in the coin/credit card discussions.

[Puppycow]

Actually, I think there are laws stating that payments in coins for debts over a certain value can be refused.

Probably because some jerks have tried this in the past to be annoying. Like paying a speeding ticket in pennies as an act of protest.

[Puppycow]

Vending machines generally don't accept pennies.

ETA: In Japan they generally don't accept 1 yen or 5 yen coins. Only 10 yen or more.

[Beady]

Here's the chart of acceptable forms of payment to the Vermont Department of Motor Vehicles. Notice, in several situations, cash is not accepted.




DMV Kiosk The following credit/debit cards: Discover, MasterCard, VisaMailed transactions

Personal or business check
Money order
No 2-party checks accepted
Main/Branch Offices (In Person)

Cash
Personal or business check
Money order
Travelers check
No credit/debit cards accepted (except at kiosks)
No 2-party checks accepted
Mobile Van (In Person)

Personal or business check
Money order
Travelers check
The following credit/debit cards: American Express, Discover, MasterCard, Visa
No cash accepted
No 2-party checks accepted
On-line ServicesThe following credit/debit cards: Discover, MasterCard, VisaTown Clerks (In Person)

Personal or business check
Money order
No cash accepted (except for payment of processing fee)
No 2-party checks accepted
No credit/debit cards accepted

[Dave Rogers]

So, does that mean that if I try to pay my rent in $1 bills, and the rental agency insists on checks and NO bills, then the govt. will not recognize the debt and I don't have to pay rent????

I suspect that the answer is that legal tender rules don't supersede contract law. If you've signed a contract in advance that specifies means of payment, then you have to abide by that contract or compensate the other party for any breach of it. So, for example, if you insist on paying in dollar bills when you've contracted to pay by cheque or money transfer, then your landlord would be able to sue you for recompense for any inconvenience or expense caused, and you'd probably end up having to pay him compensation. But that would then be a debt, so you could insist on paying that in dollar bills if it makes you feel better.

In the case of goods or services, where payment is in advance or effectively simultaneously with delivery, then there is never a debt, and an invitation to tender doesn't create a contract, so any vendor of goods or services can state in advance what means of payment they will or will not accept.

Dave

[The Central Scrutinizer]

You could, if you really wanted to be an ass, offer payment in pennies.

I'll have to do some research on the exact statute, but businesses do not have to accept a wheelbarrow full of pennies.

ETA: Others have already posted the information

[Furcifer]

I just read that all legal American paper currency must be accepted as payment for any and all debts.

Not only that, but if a business or landlord or whatever, refuses to recognize your legal tender as good enough to pay your debts, then the USA no longer recognizes...that debt!!!

So, does that mean that if I try to pay my rent in $1 bills, and the rental agency insists on checks and NO bills, then the govt. will not recognize the debt and I don't have to pay rent????
:p

Short answer, no. I actually had this problem 2 years ago. I had made specific arrangements with the landlord to pay my rent in cash. A new owner and property management company took over. The manager informed me that company policy wouldn't allow her to take cash payments. I got her a money order (cost me $5 and an hour of my time to get one) the first time. I told her then I wouldn't be doing this all the time and that I had made specific arrangements to pay cash and that cash was legal currency.
Long story short she refused to accept the cash and after a few months it went to court. I argued that cash was legal tender and the companies policy to refuse payment in legal tender nullified the debt. It made no sense because there was nothing to prevent the landlord from demanding payment in chickens or uncut gem stones.

The court avoided ruling on the legality of not accepting cash by saying it was my responsibility to pay the rent by money order or check and then take them to court. It appears the responsibility of paying the rent out weighs anything else. Who knew.

[MikeMangum]

According to the Treasury, businesses can pretty much decide for themselves what they want to accept.
http://www.ustreas.gov/education/faq/currency/legal-tender.shtml

The distinction is that a business can refuse to do you business with you (pre-transaction) if the method of payment is not to their liking. That is not the same thing as saying that a debtor doesn't have to accept legal tender as payment for a debt.

ETA: as part of the legislation that removed the actual precious metal from coins, debtors are required to accept "legal tender". Without that requirement, there is no fiat money.

http://en.wikipedia.org/wiki/Legal_tender
In some jurisdictions legal tender can be refused as payment if no debt exists prior to the time of payment (where the obligation to pay may arise at the same time as the offer of payment). For example vending machines and transport staff do not have to accept the largest denomination of banknote. Shopkeepers can reject large banknotes — this is covered by the legal concept known as invitation to treat. However, restaurants that do not collect payment until after a meal is served would have to accept that legal tender for 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 in law, as anything other than an offered payment for debts already incurred, would not be effective.

[Ferguson]

This happened to me once at a store, I was all rung up at the register, total round $40-50, which I had, but all in ones and quarters. The cashier said, "No, you can't pay $40 like that." So I just had to leave my stuff there bagged and went next door to buy the same things, when I told the cashier about the store next door he laughed and said, "Money is money in this store." :D

So, at least the system works, cashiers who don't want to count 1's don't have to, and cashiers who are willing to receive more business.

I also had a rent that I had to pay with money orders, not checks or cash, that was a real ***** because it meant an extra $4-5 each month.

Never really thought about suing or arguing in either case though since I figured it's in the lease or company policy somewhere...

[Thunder]

question: how can a contract between two people, supercede the law regarding legal tender?

if the law says "this paper and coins is good for ALL debts, public and private", then how can a contract specifying payment ONLY by check or money order, be valid?

has the SCOTUS looked at this issue?

[Furcifer]

Never really thought about suing or arguing in either case though since I figured it's in the lease or company policy somewhere...

The only reason I did was because I specifically chose the apartment because they were willing to accept cash. I could have taken another apartment but they insisted on post dated checks. I've just had too many problems with checks and banks taking out fees then bouncing them. Then you have to call them and have it reversed and pay an NSF fee. I like paying cash. I know it's paid and there's never any problem as long as you get a receipt, which I always do.

The funny thing is when I had to pay them the back rent they were more than willing to accept the cash. Go figure.

[Furcifer]

question: how can a contract between two people, supercede the law regarding legal tender?

if the law says "this paper and coins is good for ALL debts, public and private", then how can a contract specifying payment ONLY by check or money order, be valid?

has the SCOTUS looked at this issue?

edit: I misunderstood you

It think it's allowed because of trade. It's essential to protect contracts even if they don't involve the exchange of tender.

[WildCat]

Remember when Kramer tried to pay for some calzones in change?

kMimygVTgbU

[MikeMangum]

question: how can a contract between two people, supercede the law regarding legal tender?

if the law says "this paper and coins is good for ALL debts, public and private", then how can a contract specifying payment ONLY by check or money order, be valid?

has the SCOTUS looked at this issue?

A party can be required to accept cash when 1) there is pre-existing debt, 2) there is no agreement limiting forms of payment, 3) the contract or agreement denominates payment in dollars or the equivalent thereof.

Parties have broad leeway on what they can agree to in a contract; there is no reason to limit the ability of parties to come up with whatever payment method or medium of exchange that they want, assuming all parties agree and no laws are broken in the process. When there is no pre-existing agreement on method of payment, and assuming the amount owed is denominated in United States dollars, the debtor cannot after the fact declare that he will not accept legal US currency as payment for the debt.

[Dave Rogers]

question: how can a contract between two people, supercede the law regarding legal tender?

Because the law doesn't specify how a consideration must be paid; rather, it specifies a default agreement if no other agreement has been made. This prevents a situation arising in which a vendor can retrospectively demand payment by some inconvenient means; if no form of payment is specified in advance, then legal tender must be accepted as the default form of payment. The law can be superseded because it's intended to be superseded, but only by agreement in advance.

Dave

[drkitten]

question: how can a contract between two people, supercede the law regarding legal tender?

Because you agree to the modification when you make the contract.

The same way that you can waive your right to sue when you sign a contract that specifies that all disputes will be settled by arbitration.

I just had some work done on my house -- I had had a pipe break in the sink and I needed it fixed NOW. The law in my state specifies that I have the right to a "cooling-off period" after signing any [building] contract and can unilaterally abrogate that contract within a three day window or something like that -- quite progressive and I approve of it in general.

But in this specific instance, this would have allowed me to get my sink fixed and then decide tomorrow morning to "abrogate" the contract and not have to pay the plumber. Which would have been deeply unfair to him, of course. So I had to sign a piece of paper waiving the cooling-off period before he would touch the pipes.

Similarly, if the plumbing company specified that it wanted all payments to be made by credit card (to reduce the risk to plumbers carrying cash or the risk of the employees cutting "deals" on the side), that's their right. If you still choose to contract with them, knowing that they will only take cards, you're hardly in a position to complain when they hold you to what you agreed.

[pipelineaudio]

I've run recording studios for most of my adult life. Most of us know the likely profession of most musicians' bill payers/spouses. For the odd small job getting paid in all ones is comical, but when the bill runs into the thousands it can be a real PITA.

I might complain while I'm counting it, but I'm still grateful as hell to take any money for this after the early 90's

[Mongrel]

question: how can a contract between two people, supercede the law regarding legal tender?

if the law says "this paper and coins is good for ALL debts, public and private", then how can a contract specifying payment ONLY by check or money order, be valid?

has the SCOTUS looked at this issue?

IANAL but it's probably worth checking the legal definition of debt. Walking into a shop for a coffee and a pack of gum probably isn't debt as your just using cash as a medium of exchange.

There's probably some liability issues as well, from having large piles of cash around and potential money laundering issues. For example when we got our new car they could only take a proportion of the total cost in cash, the rest had to be through bankers draft or electronic transfer. We couldn't just load up £10K in cash and slap it on the table, that'd be fraught with issues. Then imagine the issues with their 50K+ cars....

[JoeTheJuggler]

When I lived in Ecuador, and the currency was crashing (just before they froze the value of the Sucre wrt the U.S. Dollar and then adopted the USD as their currency), you frequently saw situations where business owners couldn't make change. It was up to the buyer to get correct change (or at least something reasonably close).

Back to the idea of paying your rent in singles: if you mailed that box full of ones to your landlord, it's up to you to pay the shipping, and the landlord could claim he never received it. In that situation writing a check is more for your own protection than it is for anyone else's convenience.

[blutoski]

When I lived in Ecuador, and the currency was crashing (just before they froze the value of the Sucre wrt the U.S. Dollar and then adopted the USD as their currency), you frequently saw situations where business owners couldn't make change. It was up to the buyer to get correct change (or at least something reasonably close).

Back to the idea of paying your rent in singles: if you mailed that box full of ones to your landlord, it's up to you to pay the shipping, and the landlord could claim he never received it. In that situation writing a check is more for your own protection than it is for anyone else's convenience.

I'm sure the laws are a little different in Canada, but it sounds very similar.

I recall a few years ago some students at UBC hatched a protest over tuition increases: they obtained pennies from a bank and came in with sacks. They hadn't done their homework. The university had no obligation to accept this method of payment (at the time, coins could be refused over $10). They all lost their registration times and some were unable to get their courses.

As a landlord, I'd never want to deal with cash. No paper trail, and I don't want to be walking around with a walletful of mug-me.

A corner store near my house is plastic-only after 10pm.



A related thought with a skeptical angle: many shops refuse to accept large bills ($50, $100), as they don't want to risk a counterfeit. As far as I know, it's not a legal violation.

[Mongrel]

A related thought with a skeptical angle: many shops refuse to accept large bills ($50, $100), as they don't want to risk a counterfeit. As far as I know, it's not a legal violation.

A much more common reason is change. If you've only got £50 float in your drawer and someone tries to buy a pack of 50p gum you've just wiped out half your till.

[MikeMangum]

A related thought with a skeptical angle: many shops refuse to accept large bills ($50, $100), as they don't want to risk a counterfeit. As far as I know, it's not a legal violation.

Stores are perfectly free to do this in the US; there is no existing debt yet because the parties haven't actually agreed to a transaction yet. A store can decide that it will not accept specific denominations of dollars before the purchase is made. However, a restaurant where you pay for the meal after recieving the product cannot tell you after you have eaten the meal that they will not accept $100 bills. They can tell you before you order (before there is actually a transaction) that they will not accept certain denominations and you are free to either agree to the transaction or disagree. A restaurant where you pay for the food before you recieve it, like a fast food restaurant, doesn't have that concern.

One wierd thing I've read about accepting or not accepting specific denominations is that a vendor cannot choose a specific amount of a denomination to accept; they either accept pennies or they don't, regardless of amount. For example, a store wants to charge you $5.99 for something. They either must accept 599 pennies, or they cannot charge you an amount that can only be paid with pennies. ;) That is something I would like to have verified - it just seems weird and pointless.

[zerospeaks]

A guy got towed. He was ticked off, so he paid in pennies.
The company refused...

If I remember this vid correctly, an officer showed up and said "yep, it's legal tender, ya gotta take it because you say you accept cash"

They had to take it.

http://www.youtube.com/watch?v=Mzc8vS-ac-g

[rjh01]

In Australia shops can refuse to accept a large number of coins.


coins are legal tender for payment of amounts which are limited as follows:
not exceeding 20c if 1c and/or 2c coins are offered (however, it should be noted that these coins have been withdrawn from circulation but are still legal tender);
not exceeding $5 if any of 5c, 10c, 20c and 50c coins are offered;
not exceeding 10 times the face value if coins in the range 50c to $10 inclusive are offered; and
to any value if coins of value greater than $10 are offered.


Please note that the largest coin in mass circulation is the $2 coin.

http://www.rba.gov.au/banknotes/legal-framework/index.html

Edit. Change the url. It is worth a read. At least for Australians.

[blutoski]

A guy got towed. He was ticked off, so he paid in pennies.
The company refused...

If I remember this vid correctly, an officer showed up and said "yep, it's legal tender, ya gotta take it because you say you accept cash"

They had to take it.

http://www.youtube.com/watch?v=Mzc8vS-ac-g

Interesting. I did locate the Canadian situation. A Canadian business that accepts cash can still refuse coins if they exceed:

* 25c of pennies
* $5 of nickels
* $10 of dimes
* $25 of loonies
* $40 of twonies

Sounds practical.

[sadhatter]

Actually, I think there are laws stating that payments in coins for debts over a certain value can be refused.

I remember back when i was a kid ( about 1991 or so i was 6-7 at the time) a lady made a huge stink about a local grocery store not accepting her pennies for a $100+ grocery bill. She made a huge stink about it it was in a few local papers and generally caused some havok for a while.

The grocery stores reasoning was that she could get said pennies transferred into real money before coming to the store. And i stand by that, if you are paying an amount that large in pennies, your going to waste the hell out of someones time ( think of counting up a till, then having to count 10000+ pennies.) , so you should be the one having your time wasted, it wasn't them paying in pennies.

From what i can recall it all came down to after a certain amount you can refuse pennies specifically, and for obvious reasons.

As an afterthought, think of a fairly large city grocery store, and EVERYONE one day pays with pennies. Think of all the extra man/woman hours that would be wasted.

[Michael Redman]

As an afterthought, think of a fairly large city grocery store, and EVERYONE one day pays with pennies. Think of all the extra man/woman hours that would be wasted.

Modern pennies weigh 2.5 grams, or $4 a Kilo. Sell $100,000 worth of groceries*, and you're handling 25 metric tons, or about 27.5 short tons, of pennies.

Better have a strong floor.


(*No idea if that's typical, but it wouldn't surprise me.)

[sadhatter]

Modern pennies weigh 2.5 grams, or $4 a Kilo. Sell $100,000 worth of groceries*, and you're handling 25 metric tons, or about 27.5 short tons, of pennies.

Better have a strong floor.


(*No idea if that's typical, but it wouldn't surprise me.)

I could see that being realistic, working at a video store in my city we would have some nights ( granted this was about 8-10 years ago.) where we pulled in $2000 so a grocery store making 100 000 seems reasonable.

Though i did let a kid pay in pennies for a Snes rental once, only because he rented a terrible game, and then spent the rest of the day collecting pennies to rent a good one.

[MikeMangum]

Modern pennies weigh 2.5 grams, or $4 a Kilo. Sell $100,000 worth of groceries*, and you're handling 25 metric tons, or about 27.5 short tons, of pennies.

Better have a strong floor.


(*No idea if that's typical, but it wouldn't surprise me.)

I don't really see a single grocery store taking in over 5% of all pennies in circulation. ;)

[rjh01]

In our local supermarket there is a self serve checkout, where you can put coins in a slot to pay for the groceries. Just had a thought: what happens if I try to pay for my $50 groceries with coins? Apart from taking ages to put them all in, I think I might get away with it. Hope they have a huge bucket for the coins.

[Ysidro]

This happened to me once at a store, I was all rung up at the register, total round $40-50, which I had, but all in ones and quarters. The cashier said, "No, you can't pay $40 like that." So I just had to leave my stuff there bagged and went next door to buy the same things, when I told the cashier about the store next door he laughed and said, "Money is money in this store." :D


Damn, when I worked retail I would have never turned down that much change and small bills, even at the end of the night. You never know when you end up hurting for change!

I might have scoffed at $50 worth of unrolled pennies though. :p

[Mongrel]

In our local supermarket there is a self serve checkout, where you can put coins in a slot to pay for the groceries. Just had a thought: what happens if I try to pay for my $50 groceries with coins? Apart from taking ages to put them all in, I think I might get away with it. Hope they have a huge bucket for the coins.

AFAIK - most coin operated items have a limited size storage, if you were first in line after they were emptied you might get away with it

[Modified]

In our local supermarket there is a self serve checkout, where you can put coins in a slot to pay for the groceries. Just had a thought: what happens if I try to pay for my $50 groceries with coins? Apart from taking ages to put them all in, I think I might get away with it. Hope they have a huge bucket for the coins.

This is how I get rid of my change, though only two or three dollars at a time. I'm probably doing them a favor, since the majority of customers will be taking change out.

[Dave Rogers]

This is how I get rid of my change, though only two or three dollars at a time. I'm probably doing them a favor, since the majority of customers will be taking change out.

I don't think I've ever paid for anything with a large-ish collection of smaller coins without the person at the till actually thanking me for it. As Ysidro said, they benefit from having a good supply of change.

Dave

[UNLoVedRebel]

I have a dollar bill that looks a little different from the usual. Instead of saying "In God We Trust" it says "9-11 truthers think all Latinos are Puerto Rican."

[DevilsAdvocate]

do businesses have the right to insist on payment in check, CC, or no bills under $20?

how would such a disagreemant be solved?Yes (in the U.S., may depend on state laws). Disagreement would be solved in court.

[Andrew Wiggin]

AFAIK - most coin operated items have a limited size storage, if you were first in line after they were emptied you might get away with it

I remember a coin laundry where if you were lucky, and the coin bin hadn't been emptied in a while, you could drop a quarter in, and it would slide off the pile, down the back of the machine, and out onto the floor. Sometimes one quarter would dislodge several dollars worth. Ethics aside, picking change off the floor is hard to fault, and the free service was hardly my fault.

A

[DevilsAdvocate]

question: how can a contract between two people, supercede the law regarding legal tender?

if the law says "this paper and coins is good for ALL debts, public and private", then how can a contract specifying payment ONLY by check or money order, be valid?

has the SCOTUS looked at this issue?The law says paper money and coins CAN be used to pay debts. The law doesn't say that it HAS to be accepted. A contract could be for payment in the form of goats, or tubes of toothpaste, or services, or anything.

For something that has to be paid before purchase, the business can simply accept or not accept the payment offered.

For payments for dollar amounts for contracts, like a rental agreement, the law is not clear. Certainly legal tender recognized by the government CAN be accepted. But there is nothing prohibiting a business from limiting the form of payment or even requiring another type of payment.

As far as I know, the SCOTUS has never addressed such a case, and there are even any very relevant court cases.

If a business wants payment only by credit card, or only by tubes of toothpaste or dishwashing or something other than legal tender, they should put that requirement in the contractor they will most likely lose on court. Similarly, if someone wants to pay a large debt in pennies or coins or single dollar bills, there is nothing that prevents the business from refusing the legal tender or from requiring that the customer convert the currency to a more manageable amount.

If push came to shove, I think a court would decide that the customer is obligated to either convert the pennies to large dollar amounts or compensate the business for the expense of doing so.

If it came down to a business requiring payment by credit card, I think a court would decide that a customer can pay by cash (or check) unless the business had required payment by credit card in the contract because the consumer may not be able to get a credit card or may have to pay an fee to get a credit card, which was not part of the contract.

[FarmallMTA]

Yes, but if you have a contract with your landlord that specifies payment terms, they can insist it be paid by check. If the rental contract specifies that you pay in live chickens, that's enforceable too.

No, it's not. Legal tender laws supersede other payment specifications not conforming to the Legal tender laws. That's a non-enforceable contractual clause.

[fuelair]

question: how can a contract between two people, supercede the law regarding legal tender?

if the law says "this paper and coins is good for ALL debts, public and private", then how can a contract specifying payment ONLY by check or money order, be valid?

has the SCOTUS looked at this issue?

Saying it is good for... is not a requirement it is merely a statement. A requirement would say"This paper and coins must be accepted as payment for any debt, public or private!" The two statements are not equivalent.

[MikeMangum]

The law says paper money and coins CAN be used to pay debts. The law doesn't say that it HAS to be accepted.

No, that is exactly what it says, within limitations. If there is no pre-existing agreement on the form of payment, and a debt accrues, the debtor can pay the debtee with legal tender of any denomination or any combination thereof. That's why the person who had his car towed (no prior agreement on method of payment) was able to pay with pennies to have his car released to him, with the police there as backup to enforce the law.

If you owe money to someone, and there is no prior agreement on method of payment, and you offer to pay them in pennies but are refused, you are legally absolved of the debt and can get a finding to that effect in court, assuming 1) you can prove that you offered payment in legal tender, 2) you can prove that the debtee refused to accept that payment, and 3) the debtee is unable to prove that a prior agreement regarding method of payment existed.

Legal_tender
"Legal tender or forced tender is an offered payment that, by law, cannot be refused in settlement of a debt, and have the debt remain in force."

And yes, you can specify payment in chickens in a contract, you simply aren't going to get many takers. You just can't specify payment in chickens after the fact, although payment can be made in chickens assuming both parties agree to that form of payment.

[daenku32]

I think it could be winnable in court to argue that a landlords expectation of the rent in a form that requires external expenses would be against the law. That is if I knew what law to refer to. It just sounds like there should be a law against that.

[Aepervius]

Actually, I think there are laws stating that payments in coins for debts over a certain value can be refused.

Even bill can be refused if it is the same as here around. The number of coin /bill you give, msut be reasonable for the buying youa re doing. So paying 5/10 cent of coin for a bread is OK (60 cent) but not paying in 1 cent, or you can pay with 1 euro bill the 12 euro gizmo you want to buy but not pay with 10 euro bill the 6000 euro car you want to buy.

The same the other way around exists, you can't force a merchant to accept denomination for which they would have to give back a huge amount of changes. For example you can#t pay the aforementioned bread with a 500 euro bill.

If the US is anything like that, then what parky said at the top is BS. I doubt anyway the gov would allow you avoiding paying if the other party refuse a specific bill denomination. It sound like the same BS the tax escaper are using when they get their ass handed back in court.

[Cavemonster]

No, it's not. Legal tender laws supersede other payment specifications not conforming to the Legal tender laws. That's a non-enforceable contractual clause.

You misunderstand the legal tender laws. Let's put this to bed for good.
From the US treasury site.

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.
link (http://www.ustreas.gov/education/faq/currency/legal-tender.shtml)

Once again, there is no federal stature mandating that a private business, person or organization accept coins or bills for goods and services. I can demand pennies only, or chickens or pocket lint in exchange for any goods or services and my contracts would be completely valid.

[Pup]

Once again, there is no federal stature mandating that a private business, person or organization accept coins or bills for goods and services. I can demand pennies only, or chickens or pocket lint in exchange for any goods or services and my contracts would be completely valid.

I agree with you on that, and even posted something similar upthread, but what it doesn't seem to address is a contract that produces a debt.

In other words, if I have a car for sale, and want to be paid in chickens, I'm perfectly within my rights to say, "Pay me 10,000 chickens or I won't sell you the car." No debt is incurred; my potential buyer can just walk away.

But what if I start a car loan business, where I give people $10,000 cash to buy a car and require that they pay me back at the rate of 100 chickens a month? Let's say that somebody agrees to that, but about the third month they're tired of hauling chickens around, so they say, "Forget this, I'm paying you the rest in $20 bills." And let's say that we do agree that the dollar amount is equivalent to the value of the chickens.

Would I be required to accept the $20 bills because it's payment of a debt? Or could I demand the chickens because that was in the contract?

[Floyt]

I've heard some urban legends about people paying their taxes by writing a cheque on the side of a cow though.
-PbFoot

That one is fictitious, but a lot of fun to read: Board of Inland Revenue v Haddock (http://en.wikipedia.org/wiki/Negotiable_cow)

Misleading Cases in Common Law indeed! :D

[Foolmewunz]

No, it's not. Legal tender laws supersede other payment specifications not conforming to the Legal tender laws. That's a non-enforceable contractual clause.

I suppose you really want to believe that as it plays into the grand One World Government Amero NWO NAFTA Bilderberg Evil Conspiracy Illuminati threat that's necessary to so many people.

Unfortunately, you're wrong, and any libertarian worth his salt could have saved you the trouble of posting that. Contract law is allowed to supersede all sorts of regulations, and one of those areas is the federal "regulations" on legal tender.

By your claim, barter would be illegal. It's not. It's just not, as mentioned above by MikeMangum and Cavemonster, real popular, since not a whole lot of us have fourteen hogsheads of blackstrap molasses in their sitting room for when the rent or electric bill comes due. Ergo, since contracts represent a mutual undertaking, a property owner wouldn't find many people who'd sign a lease or rental agreement that required them to pay in bushels of wheat or wheels of cheese. For that reason, it's not popular.


Sidebar: Out here in The Rest of the World, landlords quite regularly accept only direct deposit. They give you an account number and you go to an ATM and put the money directly into their bank. If you want to use a check, you can't. If you want to wire transfer, you can't. If you want to pay cash at their abode, you can't.

[Foolmewunz]

I agree with you on that, and even posted something similar upthread, but what it doesn't seem to address is a contract that produces a debt.

In other words, if I have a car for sale, and want to be paid in chickens, I'm perfectly within my rights to say, "Pay me 10,000 chickens or I won't sell you the car." No debt is incurred; my potential buyer can just walk away.

But what if I start a car loan business, where I give people $10,000 cash to buy a car and require that they pay me back at the rate of 100 chickens a month? Let's say that somebody agrees to that, but about the third month they're tired of hauling chickens around, so they say, "Forget this, I'm paying you the rest in $20 bills." And let's say that we do agree that the dollar amount is equivalent to the value of the chickens.

Would I be required to accept the $20 bills because it's payment of a debt? Or could I demand the chickens because that was in the contract?

Usual disclaimer applies (hadn't seen your answer as I hadn't scrolled to the end of the thread) - I am not an attorney nor do I play one on the internet.

I believe that contract law would be fairly strict. If you went into the contract with eyes open and agreed to pay in C-chix(100 chickens), then the only way you'll get out of it is to renegotiate the contract in terms acceptable to both parties. (You'd also have to afix the USD to C-chix exchange rate, or come up with an agreed upon method of determining same based on the payment due date. Chickens go up and down in price and have varying weights.)

[Furcifer]

No, it's not. Legal tender laws supersede other payment specifications not conforming to the Legal tender laws. That's a non-enforceable contractual clause.

Want to bet on that? There is nothing in the law that forces anyone to accept payment in legal tender. The dollar bill is just another valid form of payment.

Barter wouldn't be enforceable either if tender laws superceded contract laws.
edit: sorry FW, didn't mean to mow your lawn. i was writing at the same time, just much slower. you are of course a genius

[Loss Leader]

So, does that mean that if I try to pay my rent in $1 bills, and the rental agency insists on checks and NO bills, then the govt. will not recognize the debt and I don't have to pay rent????


Yeah, that's exactly how the world works. Hundreds of thousands of men and women in law and government over the last several hundred years all worked to build an economic system that could be overturned on a technicality.

"Oh, he tried to pay with one dollar bills. We never actually thought anyone would ever do that. Well, pack it up, boys. Lights out. Let's all go home. Society's over."

[Loss Leader]

But what if I start a car loan business, where I give people $10,000 cash to buy a car and require that they pay me back at the rate of 100 chickens a month? Let's say that somebody agrees to that, but about the third month they're tired of hauling chickens around, so they say, "Forget this, I'm paying you the rest in $20 bills." And let's say that we do agree that the dollar amount is equivalent to the value of the chickens.

Would I be required to accept the $20 bills because it's payment of a debt? Or could I demand the chickens because that was in the contract?


The answer to your question is contained in the bolded words above. What you're asking about is a contract that has been partially executed. In other words, everyone started performing on the contract but performance isn't finished yet.

What to do with breaches of partially executed contracts is a huge problem in the law of private relations. In general, the answer is that if something was good enough for the parties to do for a while, it remains good enough and they'll have to keep doing it.

All sorts of things can crop up that would negate that, though. For one thing, the price of chilckens could skyrocket, so that it's cheaper to just default on the contract than to keep paying the number of chickens one is supposed to. In your example, the thing that was given for the chickens was money; it's easy enough to just default and figure out everybody's money damages. But what if the thing exchanged for the chickens was singing lessons, or the chance to take batting practice with the Phillies?

The answer is that there is no answer. It would have to be litigated. And we lawyers like it that way.


Disclaimer: IAAL, and a good one, too.

[Furcifer]

@Loss Leader- the key word in your post being "default". Without both parties agreeing to change the terms there's no way for 1 party to arbitrarily determine the price of a chicken and start paying in "legal tender" without notice to the other party. At least that's my understanding of it.

[Michael Redman]

@Loss Leader- the key word in your post being "default". Without both parties agreeing to change the terms there's no way for 1 party to arbitrarily determine the price of a chicken and start paying in "legal tender" without notice to the other party. At least that's my understanding of it.

The scenario states that the cash payment is economically equivalent to the chicken payment. The creditor is going to have a hard time making a case for economic damages.

[Hamradioguy]

Not exactly a "cash as legal tender" matter, but an interesting aspect of contract law: My mortgage for my home was obtained via the Farmers Home Administration, and the mortgage contract clearly stipulated a monthly payment "...be made to the FHA even if this mortgage is purchased by another entity...". It also stipulated that payment of property taxes would be my responsibility and that I would not pay escrow payments to the mortgage holder.

After about fifteen years the mortgage was indeed sold- to a bank based in Florida. They immediately insisted that I make mortgage payments directly to them and not FHA, and they also tacked on "mandatory escrow payments for property tax payments" (Held without interest, BTW). When I challenged that by quoting the applicable part of my mortgage contract, they told me, "Oh we simply abrogated that part of your contract". My attorney said he didn't think that abrogating a contract was legal.He also said while he'd be glad to take the case he didn't think it was worth my spending an amount close to the value of the mortgage on a case that might not be won in the courts. Fortunately I was able to find the money to buy out the mortgage.... And help get a state law passed requiring escrow payments to earn interest while held.

I don't pretend to understand contract law, but it sure looks as if the old "Because I say so" approach can often trump what seems to be the law.

[Loss Leader]

@Loss Leader- the key word in your post being "default". Without both parties agreeing to change the terms there's no way for 1 party to arbitrarily determine the price of a chicken and start paying in "legal tender" without notice to the other party. At least that's my understanding of it.


What you just said doesn't make any sense to me. I don't understand what point you're trying to make.

[Foolmewunz]

I don't pretend to understand contract law, but it sure looks as if the old "Because I say so" approach can often trump what seems to be the law.

Oh, a lot of decisions are made knowing that you could whup the other guy in court if it came down to it. We have a common situation in shipping that we always refer to as "holding new shipments for old bills". It's quite illegal. In short, if I give you credit for twenty consecutive container shipments and you haven't paid for them, I can hold the twenty-first, but I can only hold it against payment of the freight due on that container, not the previous past due amount. (The fact that your goods are in the container makes it unlike other past due issues.)

But, many a time I've had the pleasure of hearing an importer say, "Well, you can't hold my container for the old hundred thousand we owe. You can only put COD on the current 3000 bucks for this container."

Me: "Gee, I'm not sure about that. Why don't I get my attorney to contact your attorney next week sometime, but until then, the container will sit on the pier and not only will you not have your sweaters, but you'll likely be into the carrier and terminal for storage and demurrage."

They generally dig up the funds for the overdue amount, if they have them, at that point.

Like I said, not real legal. But it works because I have control of their container. They'd beat my butt in a court case but they can't afford that as they need their goods and all that they'd win in court was that I'd have to release their goods, which is a small victory since I intended to do that all along.

[Furcifer]

What you just said doesn't make any sense to me. I don't understand what point you're trying to make.

If you are supposed to pay me $100 every month on the 1st and you don't you "default". It's the failure to meet the terms of the contract. If you tried to pay me with chickens because that's all you had and I said "no thanks" you would be in default. You can't just decide to pay in chickens because you think it's fair.
Now if it was the other way around and you were supposed to pay me in chickens you couldn't just decide to pay me in legal tender. If you tried to and I refused you would still be in default. You would still be breaking the terms of the contract even though it's legal tender. Without me agreeing to change the original agreement you would be in default.

[mhaze]

The distinction is that a business can refuse to do you business with you (pre-transaction) if the method of payment is not to their liking. ....

Because a personal safety issue is involved. One of the absolute best ways that someone in business can protect themselves against robbery and burglery is to prominently place signage and enforce a rule against handling cash.

In some countries, where due to the political situation cash may be preferred, and where risk is substantial, a landlord may require the renter to meet them at the bank to hand over the money and make the transaction. Then neither party "carries cash".