Which one of the following statements correctly describes the meaning of legal tender money?
[UPSC Civil Services Exam – 2018 Prelims]
(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
- Legal tender refers to an officially recognized form of payment that holds the authority to settle public or private debts and fulfill financial obligations as per the law.
- It typically encompasses the national currency, including paper money and coins, which are legally declared as valid means of payment.
- It is important to note that cheques, unlike legal tender, can be rejected by a party as a mode of payment settlement.