Legal Tender and consumer contract law

trusaiyan

Spank said:

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.

That wasn't the reason given. The retailer had a blanket company policy to reject the note, regardless if customer's note was forged or the till was full or empty. Shops that have a policy should clearly state it, the fact they 'don't have to' is ridiculous when we are dealing with legal tender.

However, even in countries with 'hard' legal tender laws, where businesses must be law accept any legal tender for any payment obligations (including instant retail transactions), there is an exception in the 'good faith' principle that would allow them to reject it if they do not have correct change to give or suspected fraud.

unholyangel

trusaiyan said:

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). 

Responses to the parts in bold, in order:
1) I made no such assertion
2) You're still not understanding what legal tender actually is. It has no bearing on a contract between two parties. While they may not have stated they don't accept £50 notes (are they really supposed to give a list of everything they won't accept? that would be one hell of a long list and undoubtedly would still be non-exhaustive), the flip side of that argument is that neither did they state they would accept them. 
3) He doesn't have any - the only way he would have any rights is if they had stated they would accept £50 notes then, after the fact, tried to change their mind. 
4) See point 2.
5) There is no contradiction. You just don't understand the distinction. 


Try searching for "tender before claim defence" and that might hopefully help clear up your misunderstanding. Or look at the CPRs 37.2

unholyangel

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.

Shops could refuse to take any "currency" other than brass buttons, if they so chose. In practice they accept the local currency because it would put customers off if they needed to buy brass buttons to pay for whatever the retailer is selling. 

The whole reason money exists was to make bartering easier with a universal currency. So that rather than selling x amount of fruit n veg for half a pig then selling the pig for something else that you then sell for clothes (because the person selling clothes doesn't need fruit n veg or a pig), you'd just sell the fruit n veg for money and buy the clothes. 

It doesn't exist to dictate what currency a transaction needs to use. 

trusaiyan

unholyangel said:

trusaiyan said:

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). 

Responses to the parts in bold, in order:
1) I made no such assertion
2) You're still not understanding what legal tender actually is. It has no bearing on a contract between two parties. While they may not have stated they don't accept £50 notes (are they really supposed to give a list of everything they won't accept? that would be one hell of a long list and undoubtedly would still be non-exhaustive), the flip side of that argument is that neither did they state they would accept them. 
3) He doesn't have any - the only way he would have any rights is if they had stated they would accept £50 notes then, after the fact, tried to change their mind. 
4) See point 2.
5) There is no contradiction. You just don't understand the distinction. 


Try searching for "tender before claim defence" and that might hopefully help clear up your misunderstanding. Or look at the CPRs 37.2

For cash designated as legal tender, I believe yes they should provide a list that they will not accept (as it generally would only relate to £50.00 notes, or a blanket 'no cash' policy). It would also be helpful to state the legal currency they won't accept, like Irish/Scottish £20 notes, and it wouldn't be that difficult to do this. If they wanted to accept Quavers crisps as payment, they wouldn't be expected to show this as it isn't 'legal tender' and so no one would assume it is accepted as payment by default. Legal tender should be the minimum they will accept for any payment obligation (whether instant retail payments or debts). Shops usually have stickers/signage showing other types of non-legal tender they accept like debit/credit cards etc.

In regards to the tender before claim defence, not quite sure how this fully explains your position. In the example I gave, even if at the moment the legal tender (cash) is tendered to the retailer the debt is not automatically extinguished (and I'm not convinced anyone has provided the law as to why this is the case, plain reading of Bank of England's definition does in fact suggest that as does the below blog post example involving Tesco, so what Act of Parliament or legal precedent proves your point?), if it did get to a court situation when he is being sued for non-payment, why could he not state that either, 1) he offered to pay in legal tender cash but was refused after the debt had incurred, or 2) tender the legal tender at that point and it would, by law, have to extinguish the debt, no? 

So the restaurant have allowed a debt to incur by not requiring upfront payment, and the legal tender principle protects debtors by having their debt payments accepted in legal tender (or they cannot be sued for non-payment). So surely the restaurant WOULD in fact be forced to accept the payment if they wanted to have their £50 meal paid for, because they could not successfully sue him (as he tendered in legal tender). The £50 note is legal tender and he is paying for a debt. Of course this is hypercritical and it would never get to court over such trivial amounts, and the court costs would trump the £50, but is this not nevertheless true?

If legal tender does NOT protect him even in situations where he is paying off a debt like this, UNDER WHAT SITUATIONS DOES LEGAL TENDER HELP? Name a situation... The below example strongly suggests the principle is applicable to real life situations where a debt exists - i.e paying for a taxi service after the journey, paying for a restaurant meal after eating it, paying for petrol after pumping it in etc.

And he does have a legal right for his debt payments to be accepted when tendered for in legal tender. As far as I can see, the only position that would help you would be if it could somehow be construed that the meal is not a debt, but I can't see how it isn't.

My point is illustrated in this blog post which contradicts what you are saying and this is a real life example with Tesco involved (because a DEBT now does exist in the eaten meal or petrol taken at the pump before payment):

"Contrary to popular belief, shops or individuals do have the right to refuse payment in coins or notes, even legal tender ones, before a transaction has taken place, and to demand payment in whatever form they choose. However, when the debt has already been incurred (which, under the concept of 'invitation to treat' the vendor has already supplied a good or service prior to payment), then they are obliged to accept settlement of that debt in legal tender currency up to the amount authorised in law (which in the case of £1 coins, is unlimited).

Because Tesco allowed a debt to be incurred by providing the petrol before the customer paid for it, they have to accept the customer's offer to settle the debt using legal tender currency. If they refuse to accept this form or payment, they cannot lawfully sue the customer to recover the debt, or have him arrested and charged with any crime relating to non-payment of the debt, because he has already made a legally reasonable offer to settle the debt in a form recognised as legal tender throughout the UK.

In this case, Tesco is in the wrong and the customer is well within his legal rights to try and settle the debt in pound coins, and to take their petrol free of charge if they refuse to accept his money. By refusing to accept his lawful payment, Tesco has certainly provided excellent value for money to the customer for this particular transaction.

At a time of soaring petrol prices, every little helps..."

shaun_from_Africa

trusaiyan said:

.It would also be helpful to state the legal currency they won't accept, like Irish/Scottish £20 notes, and it wouldn't be that difficult to do this. 

As your original post was asking about the legality of what happened and that question was posted in the consumer rights forum, what may or may not be helpful is irrelevant to the matter in hand.

trusaiyan said:

For cash designated as legal tender, I believe yes they should provide a list that they will not accept 

As already mentioned many times by other posters, you need to forget about what "Legal tender" is as it doesn't have any impact on what a retailer has to accept from a customer.

I'm not too sure if this has already been posted as I'm reading this on a small screen with a fairly poor internet connection so I may have missed it.
From the BOE.
https://www.bankofengland.co.uk/knowledgebank/what-is-legal-tender

You might have heard someone in a shop say: “But it’s legal tender!”. Most people think it means the shop has to accept the payment form. But that’s not the case.  

A shop owner can choose what payment they accept. If you want to pay for a pack of gum with a £50 note, it’s perfectly legal to turn you down. Likewise for all other banknotes, it’s a matter of discretion. If your local corner shop decided to only accept payments in Pokémon cards that would be within their right too. But they’d probably lose customers. 

trusaiyan

shaun_from_Africa said:

trusaiyan said:

.It would also be helpful to state the legal currency they won't accept, like Irish/Scottish £20 notes, and it wouldn't be that difficult to do this. 

As your original post was asking about the legality of what happened and that question was posted in the consumer rights forum, what may or may not be helpful is irrelevant to the matter in hand.

trusaiyan said:

For cash designated as legal tender, I believe yes they should provide a list that they will not accept 

As already mentioned many times by other posters, you need to forget about what "Legal tender" is as it doesn't have any impact on what a retailer has to accept from a customer.

I'm not too sure if this has already been posted as I'm reading this on a small screen with a fairly poor internet connection so I may have missed it.
From the BOE.
https://www.bankofengland.co.uk/knowledgebank/what-is-legal-tender

You might have heard someone in a shop say: “But it’s legal tender!”. Most people think it means the shop has to accept the payment form. But that’s not the case.  

A shop owner can choose what payment they accept. If you want to pay for a pack of gum with a £50 note, it’s perfectly legal to turn you down. Likewise for all other banknotes, it’s a matter of discretion. If your local corner shop decided to only accept payments in Pokémon cards that would be within their right too. But they’d probably lose customers. 

Your post doesn't help the situation, because A DEBT EXISTS IN THE UNPAID RESTAURANT MEAL THAT HAS ALREADY BEEN EATEN - we are NOT talking about instant/simultaneous transactions at the counter where no 'debt' has been incurred yet (such as when you pay for a product at a till).

The eaten restaurant meal is assumed to be a debt in the eyes of the law (although I'm not conclusively certain about that and this seems to be the crucial point), and therefore the concept of legal tender prevails and the retailer must accept the legal tender that has been offered or they cannot sue him for non-payment of the debt. That's the whole point of the legal tender concept...

The question is under the eyes of the law, do these types of situations constitute a 'debt'. If they do not, then what are they?
Read the example I posted with Tesco involved:

"Contrary to popular belief, shops or individuals do have the right to refuse payment in coins or notes, even legal tender ones, before a transaction has taken place, and to demand payment in whatever form they choose. However, when the debt has already been incurred (which, under the concept of 'invitation to treat' the vendor has already supplied a good or service prior to payment), then they are obliged to accept settlement of that debt in legal tender currency up to the amount authorised in law (which in the case of £1 coins, is unlimited).

Because Tesco allowed a debt to be incurred by providing the petrol before the customer paid for it, they have to accept the customer's offer to settle the debt using legal tender currency. If they refuse to accept this form or payment, they cannot lawfully sue the customer to recover the debt, or have him arrested and charged with any crime relating to non-payment of the debt, because he has already made a legally reasonable offer to settle the debt in a form recognised as legal tender throughout the UK.

In this case, Tesco is in the wrong and the customer is well within his legal rights to try and settle the debt in pound coins, and to take their petrol free of charge if they refuse to accept his money. By refusing to accept his lawful payment, Tesco has certainly provided excellent value for money to the customer for this particular transaction.

At a time of soaring petrol prices, every little helps..."

stragglebod

Oh, OK then, yes, we all agree with everything you say. That's the point of this thread isn't it? To get everyone to tell you what you want to hear?

TadleyBaggie

Blackbeard_of_Perranporth said:

After this covid thing, who actually today uses cash?

Apparently still all the takeaways in my area that only accepted cash prior to CV19.

davidmcn

stragglebod said:

Oh, OK then, yes, we all agree with everything you say. That's the point of this thread isn't it? To get everyone to tell you what you want to hear?

You're being very dismissive of how important this issue is to the community of people who need to pay for their diesel with £20 commemorative coins.

trusaiyan

davidmcn said:

stragglebod said:

Oh, OK then, yes, we all agree with everything you say. That's the point of this thread isn't it? To get everyone to tell you what you want to hear?

You're being very dismissive of how important this issue is to the community of people who need to pay for their diesel with £20 commemorative coins.

Oh yeah because it's not like it wouldn't affect literally thousands of circumstances if it was true, such as the thousands of restaurants who would potentially be breaking the law if they take payment after the meal (creating a 'debt') but claim 'no cash, card only' or 'no £50's accepted' (if the legal tender means they must accept legal tender to extinguish the debt, or they can't sue them for non-payment or get them arrested for not paying).

It has massive practical implications if true (and so it should do). Taxi drivers couldn't reject £50s or cash altogether if they take payment after service, neither could restaurants if they take payment after service, or petrol stations etc etc. It only wouldn't affect situations that are not considered a debt, such as instant payments at the till etc.

So I think it's a fairly important point.

I'm curious for the Acts of Parliament or legal precedents that back up any of the claims made by people in this thread (none have been forthcoming so far?).

FWIW, we are going to get specific legal advice on this to conclusively put it to bed - that's if it is possible and it is not a grey area. I'll post the response here for those interested.