UPDATE: George informed me that I “have misquoted me massively”, and on further remembrance, I think he’s right. George was not arguing that Scottish bank notes were legal tender, although he does maintain that the rejection of Scottish notes in England is (unfair) discrimination. However, I’m going to leave this article as it is, because its purpose isn’t to point and laugh at George, instead it is an explanation of the term ‘legal tender’. The story just serves as a bit of fun. Now let’s return to the original article.
The topic of legal tender came up when I was talking to George at the St Andrews Open Day last Wednesday.
When I’m in England, I told him, I use English bank notes1. When I return to Scotland, I keep my remaining English notes in reserve, spending any Scottish notes before my English ones. I get the feeling that English notes are more ‘proper’: they’re universally accepted, whereas some English shops are suspicious of Scottish notes. That’s why I hold on to them.
“It doesn’t matter,” said George. “It’s all legal tender.”
Hmm, I wasn’t so sure. Firstly, I knew that Scottish notes were issued by different private banks (RBS, HBOS, Clydesdale Bank)2 whereas English notes are all printed by the Bank of England. Perhaps there are more differences. Secondly, I realised I didn’t even know what the term ‘legal tender’ meant3. How could I know whether a car is mauve or not if I don’t know what colour mauve is?
“What does that even mean George?”
“Well, that you have to accept Scottish notes as payment if you’re selling something.”
This sounded stupid to me: since when were traders forced to sell anything? Surely it’s at a seller’s discretion whether or not to do business with a particular person. That makes sense, right?
“It’s discrimination,” he said.
“It discrimination against Scottish people.”
Legal tender or forced tender is an offered payment that, by law, cannot be refused in settlement of a debt, and have the debt remain in force.
Ah right, that’s what legal tender is. If one person is in a debt to the another, the creditor must accpet legal tender as payment of that debt from the debtor. That’s it.
I’d heard the phrase several times and my assumed definition (‘genuine money’) seemed to make sense. Apparently not6. Whenever I hear the phrase ‘legal tender’, I think of one of Michael McIntyre’s stories from “Live at the Apollo”, about a Scottish man trying to buy something in England with Scottish notes: “I think you’ll find pal, that’s legal tender”7. As it turns out:
Scottish and Northern Ireland banknotes are not legal tender anywhere
Oh. And even if money is legal tender, it doesn’t have to be accepted as payment:
Traders may […] choose not to accept banknotes as payment as contract law across the United Kingdom allows parties not to engage in a transaction at the point of payment if they choose not to.
In fact, in Scotland and Northern Island no paper money is legal tender; in England and Wales only English notes are. Not that the status of money as legal tender is ever something that most people will need to know or worry about.
P.S. I thought this was interesting too:
Currently, 20 pence pieces and 50-pence pieces are legal tender in amounts up to 10 pounds; 5-pence pieces and 10-pence pieces are legal tender in amounts up to 5 pounds; and 1-penny pieces and 2-pence pieces are legal tender in amounts up to 20 pence.
I’d guess most creditors would reluctantly accept a sack of coppers as payment for a debt, but they wouldn’t have to8.
(Image: 20 Scottish Pounds by Photos8.com, a Creative Commons Attribution (2.0) image from publicdomainphotos’s photostream)
- At least I think this is how the topic came up. [↩]
- Who gets to choose how much money to print? [↩]
- I wonder how many other words I think I know, but which I’ll find out mean something else? [↩]
- Still on my iPod Touch, and there’s no Wi-Fi at the end of piers :(. [↩]
- Yes, I’m using Wikipedia as my source, but it’s reliable and it seems well sourced (not that I can be bothered following the citations, I trust Wikipedia). [↩]
- Maybe those who use the term don’t know what it actually means, either. [↩]
- Imagine that, said in a really thick Glaswegian accent. [↩]
- Although they might have to in Scotland, as “Scots law requires any reasonable offer for settlement of a debt to be accepted.” [↩]