Explanation:

When a transaction occurs between two parties, an intermediate good is necessary which is acceptable to both parties, one who is buying a good and one who is selling a good. Such a good is called money. The individuals can then sell their produce for money and use this money to purchase the commodities they need. Money is also called legal tender as it cannot be refused by any citizen of the country for settlement of any kind of transaction. This means that a creditor is under compulsion to accept this money in settlement of his claims. Cheques drawn on savings or current accounts, however, can be refused by anyone as a mode of payment.