Paying a debt with legal tender can land you in hot water

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You may have heard, earlier this year, that you run the risk of being arrested if you pay for a purchase at Best Buy with two dollar bills.

Now, at least in Texas, there is precedent establishing that you can be held in contempt of court for paying a legal judgement in coins instead of bills.

The humble penny, properly known as a "one cent piece" is the most common form of currency. According to the United States Treasury Department:

You may be interested to know that the penny is the most widely used denomination currently in circulation and it remains profitable to make. Significantly, it is Congress that determines the denominations of coins that the Mint must produce and put into circulation. Each penny costs .81 of a cent to make, but the United States Mint collects one cent for it. The profit goes to help fund the operation of the United States Mint and to help pay the public debt. In 2000, this profit added up to about $24 million.

Also, while private businesses don't have to accept particular forms of legal tender as payment, federal law says that all United States money (coin and currency) are "legal tender for all debts, public charges, taxes and dues."

Except, apparently, sometimes in Texas...

—Michael A. Cleverly

Comments

George Card: [ mail | www | link ]

If United States money is legal tender for all debts, then why are some business refusing cash for payment. This practice should be illegal, right? If one wishes not to use a bank check, credit card, other electronic payment or money order shouldn't they be able to pay in cash?

Auto insurance is mandated by or government, yet insurance companies are no longer accepting legal tender for payment. Is our government mandating that we can no longer use legal tender to pay our bills? In a court of law would you be found guilty for offering to pay your debt with cash and it was refused?

Tue, 05 Jan 2010, 14:47

Chucks: [ mail | www | link ]

This practice should be illegal, right?

Nope. The merchant can specify any form of payment up front, be it dollar bills or credit card or euros or gold or cowrie shells. If you go to purchase something, say a pack of gum, the merchant can refuse to enter into a contract to provide you with the gum if you have only pennies. No debt has been incurred, so that's alright.

On the other hand, if you've entered into a contract that places you in debt, say you're renting an apartment for so many dollars a month (no description for the payment type) and offer pennies, the landlord must accept them. If he refused and took you to court over non-payment, the court would rule that he would have to accept pennies as they fulfill your contractual obligations as legal tender.

Sun, 24 Apr 2011, 11:32

Bob: [ mail | www | link ]

Wrong Chucks, the Supreme Court has ruled that payment of large bills in pennies is unreasonable and an undue hardship on the business or government and coins may be refused in such circumstances. Even banks will refuse pennies if they are not already rolled.

Mon, 06 Jun 2011, 06:02

Erik: [ mail | www | link ]

Hey Boe you got a link to that? I've never in my life heard of this "undue hardship" on any business. If you have a previously arranged debt and you in good faith try to pay using legal tender which all coins and bills issued by the Federal Reserve are (that's why they say right on them "all debts public and private") they are obliged to take US legal tender or in most cases the debt will be discharged by a court if they pursue it that far.

Mon, 06 Jun 2011, 19:41

O King: [ mail | www | link ]

I have never heard of any Supreme Court ruling that lower courts can refuse coins that are tendered for payments of fines and other legal fees.

Fri, 17 Feb 2012, 14:05

ben: [ mail | www | link ]

Can airline refuse to accept exact change, in cash notes, for a baggage fee? My bag was oversize and I was refused permission to board if I did not pay by credit card. I had a boarding pass, isn't that an existing contract? There is no "credit card only" notice that I can find on Continental Airlines/United website.

Tue, 21 Feb 2012, 05:59

ben: [ mail | www | link ]

Continental baggage policy states that "in general we will accept up to two pieces of checked baggage....". There are size and weight limits, but no mention of payment method. Isn't this an implied contract that means they must accept my bag and legal tender, unless they are refusing bags for flight safety or some other uniformly applied reason?

Tue, 21 Feb 2012, 06:09

free my people all p: [ mail | www | link ]

I've been refused twice trying to pay $934 on a fine in in Pennines the DeKalb county courthouse What can I do

Sat, 18 May 2013, 09:12

Freedom1Man: [ mail | www | link ]

I've had 1 dollar coins refused by a court as payment for a fine.

Sun, 15 Sep 2013, 15:21

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