Legal Tender and consumer contract law

trusaiyan

unholyangel said:

trusaiyan said:

unholyangel said:

trusaiyan said:

unholyangel said:

You are well and truly barking up the wrong tree. Legal tender refers to the payment of debt into court only. It has no bearing on a contract between two parties. 

ETA: Also, legal tender doesn't exist everywhere in the UK - there's no mechanism for legal tender in scots law/scotland. Even BoE notes aren't legal tender in scotland because of that. 

Thanks for the response.
So if my friend refused to pay in another way because he tendered the exact amount of legal tender (which for the purposes of argument was exactly £50), could he be sued for non-payment of the restaurant meal 'debt' in court?

Yes.
Put it this way. Legal tender does not dictate what denominations a retailer has to accept. It just means that if you perhaps agreed to pay USD, then you can't successfully be sued for non-payment, if you offer to pay into court the debt in legal tender. Despite it not being what was originally agreed. 

There can be exceptions that to that though. Particularly with cross border disputes. 

But there now exists a 'debt' (I assume), so surely at this point in these types of transactions (not merely instant transactions over the counter, but where services have already been used) the legal tendered cash must extinguish the debt?

If he can't successfully be sued in court because he offered legal tender, then surely this is the same as extinguishing the debt?
I.e. he could walk away having attempted to pay for his debt in exact legal tender, and he could not be successfully sued in court for non-payment (because he offered the correct legal tender)?

In the alternative, if the debt remains after walking away but he is brought to court by the restaurant, he could then pay in the exact legal tender he originally offered, which must by law legally extinguish the debt whether the restaurant accepts the payment in court or not?

What extinguishes the debt is paying the debt. Having a defence to any action for non-payment (which would make you liable for costs incurred) is not the same as saying you don't have to pay the original sum. 

If what you propose was correct, we'd all be paying everything with £100 notes in the hope they refused so we'd get it free. 

In a nutshell, your friend should spend less time trying to get a free lunch by misapplying technical legal arguments he doesn't understand and more time sorting out payment. Whether that be by card, having to go to the atm or, if he genuinely has no other means of payment on him at the time, then he should leave his details and/or some sort of security so he can arrange to pay later. 

I was under the impression legal tender must extinguish the debt when offered correctly in court.

My friend paid for the meal by other means of course, so no one is trying to scam anyone at all (that's a ridiculous assertion).
He merely tried to pay in legally designated legal tender (£50 note) and was rejected AFTER the service, with no instruction or signage prior to the meal that £50 note would be rejected. Retailers and restaurants should clearly state the legal tender they won't accept on signage around the shop if they intend to not accept it (I have seen some shops do this with Scottish £20's).

£50 note has been designated by government as legal tender, so it isn't wrong for him to want to know his rights and where he stands when this is rejected. Money and cash are a fundamentally important aspect of our life and we appear to have a truly ridiculous system in the UK where we let businesses decide which parts of our legal tender they will accept (completely defeating the purpose of legal tender).

You must surely see the contradiction if what you have said is true: on the one hand retailers can refuse legal tender, but on the other hand you couldn't be successfully sued in court for non-payment if you tendered to pay off the debt in the correct legal tender. It therefore begs the obvious question: why would it not extinguish the debt at the point being tendered, if in a court situation it would in effect do just that?

According to the Bank of England: "It means that if you offer to fully pay off a debt to someone in legal tender, they can’t sue you for failing to repay." I therefore fail to see how it does not in effect extinguish the debt by offering the legal tender, if it is not possible for him to be successfully sued for non-payment (unless it is NOT a debt in the eyes of the law). 

Interestingly, according to this opinion which is based on US law (so may not apply here and I don't know if these are legal experts so could be completely wrong), the meal would not be considered a 'debt' under the eyes of the law so wouldn't be protected by the legal tender principle which only protects debts (at least in the US). 

trusaiyan

davidmcn said:

trusaiyan said:

unholyangel said:

Also, offering payment in legal tender doesn't mean you don't have to settle the debt. Just that you have a defence if they sue you specifically for non-payment.

So if he offered to pay into court in the correct legal tender for the £50 meal debt (i.e a single £50 note), you are saying this wouldn't extinguish the debt (regardless of whether they take the money or not)?

Where did you get the idea that merely offering to pay the debt extinguishes the debt? It has to actually be paid.

By how the very concept is used in the rest of the world that use legal tender (Wikipedia have a good page on it): 

"Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in payment of a debt extinguishes the debt. There is no obligation on the creditor to accept the tendered payment, but the act of tendering the payment in legal tender discharges the debt."

 

trusaiyan

mattyprice4004 said:

I never understand these threads - and I used to pay for quite a lot of things with £50 notes back in the day. 
If they weren't accepted, I'd just take a card out and pay with that. 

The intricacies don't matter - what matters is he's eaten a meal, and must pay for a meal - and if they refuse a note that is very easy to copy and request another payment method then that's reasonable.
Your 'friend' sounds like one of the people who make retail / foodservice such an awful industry to work in.

Completely disagree. The intricacies do matter and a defence of cash is important as It's a fundamental problem and will only get worse, with more and more shops refusing cash altogether (not just £50s'), and so the consumer is having their choice ripped from under their feet where out of 20 shops, 3 might not accept any cash, 15 don't accept £50's, and 19 don't accept Scottish or Irish £20 notes (which are legal currency but not tender), and only some of them bothered to put signs up stating these terms!

And if the restaurant wanted to refuse £50 notes, it should CLEARLY state before service that they won't, it's legal tender after all so you would assume it would be accepted wouldn't you...

powerful_Rogue

...

davidmcn

trusaiyan said:

davidmcn said:

trusaiyan said:

unholyangel said:

Also, offering payment in legal tender doesn't mean you don't have to settle the debt. Just that you have a defence if they sue you specifically for non-payment.

So if he offered to pay into court in the correct legal tender for the £50 meal debt (i.e a single £50 note), you are saying this wouldn't extinguish the debt (regardless of whether they take the money or not)?

Where did you get the idea that merely offering to pay the debt extinguishes the debt? It has to actually be paid.

By how the very concept is used in the rest of the world that use legal tender (Wikipedia have a good page on it): 

"Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in payment of a debt extinguishes the debt. There is no obligation on the creditor to accept the tendered payment, but the act of tendering the payment in legal tender discharges the debt."

In practice the money would need to be actually handed over - you can't just offer to pay it into court, you'd need to actually pay it into court.

davidmcn

trusaiyan said:

mattyprice4004 said:

I never understand these threads - and I used to pay for quite a lot of things with £50 notes back in the day. 
If they weren't accepted, I'd just take a card out and pay with that. 

The intricacies don't matter - what matters is he's eaten a meal, and must pay for a meal - and if they refuse a note that is very easy to copy and request another payment method then that's reasonable.
Your 'friend' sounds like one of the people who make retail / foodservice such an awful industry to work in.

And if the restaurant wanted to refuse £50 notes, it should CLEARLY state before service that they won't, it's legal tender after all so you would assume it would be accepted wouldn't you...

I would never assume that any business will accept £50 notes, they've been widely refused pretty much since they were introduced.

trusaiyan

davidmcn said:

trusaiyan said:

davidmcn said:

trusaiyan said:

unholyangel said:

Also, offering payment in legal tender doesn't mean you don't have to settle the debt. Just that you have a defence if they sue you specifically for non-payment.

So if he offered to pay into court in the correct legal tender for the £50 meal debt (i.e a single £50 note), you are saying this wouldn't extinguish the debt (regardless of whether they take the money or not)?

Where did you get the idea that merely offering to pay the debt extinguishes the debt? It has to actually be paid.

By how the very concept is used in the rest of the world that use legal tender (Wikipedia have a good page on it): 

"Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in payment of a debt extinguishes the debt. There is no obligation on the creditor to accept the tendered payment, but the act of tendering the payment in legal tender discharges the debt."

In practice the money would need to be actually handed over - you can't just offer to pay it into court, you'd need to actually pay it into court.

Not if the creditor didn't accept it, it wouldn't, but the debt would be extinguished, so you are wrong.

trusaiyan

davidmcn said:

trusaiyan said:

mattyprice4004 said:

I never understand these threads - and I used to pay for quite a lot of things with £50 notes back in the day. 
If they weren't accepted, I'd just take a card out and pay with that. 

The intricacies don't matter - what matters is he's eaten a meal, and must pay for a meal - and if they refuse a note that is very easy to copy and request another payment method then that's reasonable.
Your 'friend' sounds like one of the people who make retail / foodservice such an awful industry to work in.

And if the restaurant wanted to refuse £50 notes, it should CLEARLY state before service that they won't, it's legal tender after all so you would assume it would be accepted wouldn't you...

I would never assume that any business will accept £50 notes, they've been widely refused pretty much since they were introduced.

Then we have a fundamentally absurd system, and there is no point having legally designated cash if it can be universally rejected without suspecting fraud (i.e examining it for fraud). If it can't be used anywhere, we have no consumer choice and no point in that denomination.

Spank

It's not just fraud though. The change from a £50 note (or a £20 in some small businesses) could potentially leave the till short until somebody gets some from the bank.

If a business does not want (or cant take) a form of payment (anybody remember the petrol station thread?) They dont have to have signage saying so.
It also dosent mean the debt is forgiven.

davidmcn

trusaiyan said:

davidmcn said:

trusaiyan said:

mattyprice4004 said:

I never understand these threads - and I used to pay for quite a lot of things with £50 notes back in the day. 
If they weren't accepted, I'd just take a card out and pay with that. 

The intricacies don't matter - what matters is he's eaten a meal, and must pay for a meal - and if they refuse a note that is very easy to copy and request another payment method then that's reasonable.
Your 'friend' sounds like one of the people who make retail / foodservice such an awful industry to work in.

And if the restaurant wanted to refuse £50 notes, it should CLEARLY state before service that they won't, it's legal tender after all so you would assume it would be accepted wouldn't you...

I would never assume that any business will accept £50 notes, they've been widely refused pretty much since they were introduced.

Then we have a fundamentally absurd system, and there is no point having legally designated cash if it can be universally rejected without suspecting fraud (i.e examining it for fraud). If it can't be used anywhere, we have no consumer choice and no point in that denomination.

Well, it doesn't seem to be really causing a problem to anyone, given the dwindling popularity of cash in general, and the fact (as your story demonstrates) there are simpler ways out of such scenarios than everybody going legal about it.