Paying a debt with legal tender can land you in hot water
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
Friday, July 01, 2005 at 22:52
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?
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.