Which one of the following statements correctly describes the meaning of legal tender money?
The money which is tendered in courts of law to defray the fee of legal cases
Incorrect AnswerThe money which a creditor is under compulsion to accept in settlement of his claims
Correct AnswerThe bank money in the form of cheques, drafts, bills of exchange, etc.
Incorrect AnswerThe metallic money in circulation in a country
Incorrect AnswerExplanation:
Justification: Legal tender is any official medium of payment recognized by law that can be used to extinguish a public or private debt, or meet a financial obligation. The national currency is legal tender in practically every country. A creditor is obligated to accept legal tender toward repayment of a debt.
Option C: Checques are not legal tenders since they can be refused as a mode of payment settlement by a party.
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By: Vishal