What You Didn't Know About Legal Tender

Legal tender refers to a method to conduct a payment which is recognized under the law as a proper ways to extinguish or settle a debt. Legal tender, can therefore, be deemed to include all forms of money. However, legal tender does have certain definitions in particular jurisdictions.

In certain regions, anything that is not considered to be currency or money is not accepted as a form of legal tender. This may include checks and credit and debit cards. In essence, anything that is not a cash method is usually not defined under legal tender. Legal tender, therefore, would include coins and notes are currency by definition.

In the United States, legal tender before 1853 were all measured and weighted in terms of their exact value of either silver or gold. That is to say that a silver 50 cent coin contained 50 cents worth of silver, and a one dollar coin contained exactly one dollar's worth of gold. However, cash or money in terms of a note would not be implemented until the American Civil War, where Demand Notes were printed to pay dues to the government.

The legal tender notes would finally be backed by treasury securities with the Legal Tender Act of 1862, rather than placing their value in relation to gold values at the time. An important aspect to consider is the the demonetization of currency in the United States is currently prohibited, which means that coins that were considered legal tender, such as gold coins from 1933, can still be considered as legal tender and accepted currency.

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