Which one of the following statements correctly describes the meaning of legal tender money?
- A. The money which is tendered in courts of law to defray the fee of legal cases
- B. The money which a creditor is under compulsion to accept in settlement of his claims
- C. The bank money in the form of cheques, drafts, bills of exchange etc.
- D. The metallic money in circulation in a country
Answer: B
Explanation
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. A creditor is obligated to accept legal tender toward repayment of a debt. Legal tender can only be issued by the national body that is authorized to do so