Legal Tender and consumer contract law

trusaiyan

Ditzy_Mitzy said:

Right, forgetting legal tender for the moment as it's been explained exhaustively and impeccably by @unholyangel; let's examine the issue of payment for a meal in a restaurant.  The meal comes under services offered for which payment on the spot is required, as do taxi rides, hairdressing, beauty treatments, piano lessons - there are countless things which are offered in such a manner, almost any conventional business expecting payment immediately after the fact of rendering a service falls into this category.  'Payment on the spot', doesn't mean that the receiver of the service is in debt.  In fact the service: the meal, taxi ride or horse riding lesson, isn't actually complete until it's finished.  When the service is finished, therefore, payment is required; it's not entirely different to taking something to the counter in a shop - doing so initiates the transacting phase of the purchase.
At that point, payment is made.  If payment is dishonestly avoided, such as by the diner or passenger running away, then an offence is committed under Section 3 of the Theft Act 1978.  This is called 'Making off Without Payment' or bilking, probably other things too.  It was created to allow criminal liability to be placed on someone who hasn't taken 'property' as defined by other parts of the act but hasn't paid when payment is required on the spot.  The police and criminal courts can get involved; the abiding principle is this is criminal law rather than civil. 
Debt, in legal terms, is a civil matter and arises further to situations where goods and services are rendered without expectation of immediate payment.  The debt exists until the obligation is discharged by payment or agreement not to pay.  The usual. 
There is a defence for bilking related to the quality of the service.  If, hypothetically, a meal is inedible or a taxi breaks down or a hairdo is dreadful, then the receiver of the service can enter into a dispute with the party offering the service.  The matter then becomes civil and the parties can sue each other.  Note that the offence is also committed if forged banknotes are used; I assume that the payer has to know the notes are fakes otherwise the majority of the country would be in court!
Generally speaking, in a situation where it really is impossible for a customer to pay such as one where a diner in a restaurant has forgotten his wallet, the restaurant will allow the diner a fixed period of time to go home, get his chequebook or bank card, return and pay the bill.  If the diner doesn't return by the agreed deadline, the restaurant can report the matter to the police as bilking, as there is enough to suspect dishonesty at that point, and criminal proceedings begin.  
To the £50: the diner in this case sincerely believes his note is real, has no dishonest intent and has no other means of payment on him.  The restaurant owner, conversely, worries that the note is forged and refuses it.  She does not have to accept it and can, as noted above, insist that the diner pays by alternative means by a specific time.  It's still not a debt, per se, and she is able to report the making off without payment if the diner does not return.  The offer of the £50 does not get rid of the liability.  In this situation, the only difference between a real £50 note and a worthless forgery is the restaurant owner's willingness to accept it.  
What if the diner leaves the £50 note on the table and walks out?  If we assume that it's enough to cover the meal and the note is real, no crime is committed.  It's a bit silly, because the diner can't really expect to come back and demand change, but that's the end of it.  If, however, the owner takes the note to the bank and discovers that it's a forgery, she can report the matter as bilking.  It would then be up to the diner to prove that he did not know, or believe, the note was forged, which may or may not be difficult. 
What about debt?  Well, there's always the possibility of the restaurant owner issuing an invoice with payment terms to the diner.  Then it becomes a debt and can be pursued in the normal way if not paid.  The transaction type changes, at that point, from one in which payment is immediately required to one in which payment is not immediately required which, legally speaking, is a different matter entirely.

So as I originally suggested and was the purpose of me asking the questions, it is possible the law does NOT construe the unpaid meal (or taxi service etc) as a 'debt'. Can you state the relevant case law or legal precendents which make this true without just taking your word as correct (not being pedantic, but there is conflicting information across the web on when the 'debt' begins, and some say it would be a debt)? Where was this established that they definitely would not be considered a 'debt' at the point of payment after receiving the service?

Also, you claim that "The debt exists until the obligation is discharged by payment or agreement not to pay.  The usual. ", but I can't see how this is correct if the concept of legal tender means that in the court setting, tendering in the legal tender MUST extinguish the debtor of his payment duties, regardless if the creditor actually accepts the payments, he can not be sued for non-payment. If this is false, then we don't have a concept of legal tender existing even in court...

So in your analysis, can you state a situation where legal tender law applies and protects the debtor (if it does not do in the situations I have mentioned)??

DoaM

Ditzy_Mitzy said:

Well, there's always the possibility of the restaurant owner issuing an invoice with payment terms to the diner.

Does an invoice have to include payment terms? If not then it can be argued that the bill presented after the service has completed is an invoice ... thus a debt exists rather than a "payment on the spot" situation.

/stirring the pot

MobileSaver

DoaM said:

Does an invoice have to include payment terms? If not then it can be argued that the bill presented after the service has completed is an invoice ... thus a debt exists rather than a "payment on the spot" situation.

In the absence of payment terms "the man on the Clapham omnibus" would undoubtedly assume that the bill/invoice for a meal he has just enjoyed was a "payment on the spot" situation.

trusaiyan

Takmon said:

trusaiyan said:

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

 Legal tender should be the minimum they will accept for any payment obligation (whether instant retail payments or debts). 

Just imagine how stupid it would be if all online retailers had to accept cash as payment because it's legal tender because that's what your saying...

Oh yes the countries of Denmark, Norway, France, China, State of Massachusetts (and Spain I think, among many others), are completely stupid having a hard legal tender concept *facepalm*... it is only supported by 51% of the British public (compared with 24% opposed).

There could be an exception to online payments if it was deemed impractical, but in all other circumstances where there is any type of payment obligation, the business or institution accepting payment should 100% be forced to accept the legal tender (whether instant payments or a debt, and not just in a court setting). It prevents the ludicrous situation of businesses outright rejecting cash as they please, which they shouldn't be allowed to do (unless they suspect fraud after examining). 

waamo

trusaiyan said:

Takmon said:

trusaiyan said:

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

 Legal tender should be the minimum they will accept for any payment obligation (whether instant retail payments or debts). 

Just imagine how stupid it would be if all online retailers had to accept cash as payment because it's legal tender because that's what your saying...

Oh yes the countries of Denmark, Norway, France, China, State of Massachusetts (and Spain I think, among many others), are completely stupid having a hard legal tender concept *facepalm*... it is only supported by 51% of the British public (compared with 24% opposed).

There could be an exception to online payments if it was deemed impractical, but in all other circumstances where there is any type of payment obligation, the business or institution accepting payment should 100% be forced to accept the legal tender (whether instant payments or a debt, and not just in a court setting). It prevents the ludicrous situation of businesses outright rejecting cash as they please, which they shouldn't be allowed to do (unless they suspect fraud after examining). 

Massachusetts should be referred to as The Commonwealth of Massachusetts and not state. There are a few commonwealths in the USA. 

MobileSaver

trusaiyan said:

There could be an exception to online payments if it was deemed impractical,... the business or institution accepting payment should 100% be forced to accept the legal tender ... It prevents the ludicrous situation of businesses outright rejecting cash as they please

That's just your flawed and contradictory opinion; in my opinion, given the current health and safety issues regarding Covid-19, it would be ludicrous to force businesses to accept cash.

Again though, despite it being explained to you several times, you do not seem to understand the difference between "legal tender" and "cash".

Businesses are forced to accept "legal tender" because the term by definition only applies to settling a debt in court as set down by law. So if a business takes you to court then they have to accept cash as settlement however outside of court a business is free to accept or reject any form of payment it so chooses. If you do not like the payment options of a particular business then you can choose not to use that business...

Takmon

trusaiyan said:

Takmon said:

trusaiyan said:

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

 Legal tender should be the minimum they will accept for any payment obligation (whether instant retail payments or debts). 

Just imagine how stupid it would be if all online retailers had to accept cash as payment because it's legal tender because that's what your saying...

Oh yes the countries of Denmark, Norway, France, China, State of Massachusetts (and Spain I think, among many others), are completely stupid having a hard legal tender concept *facepalm*... it is only supported by 51% of the British public (compared with 24% opposed).

There could be an exception to online payments if it was deemed impractical, but in all other circumstances where there is any type of payment obligation, the business or institution accepting payment should 100% be forced to accept the legal tender (whether instant payments or a debt, and not just in a court setting). It prevents the ludicrous situation of businesses outright rejecting cash as they please, which they shouldn't be allowed to do (unless they suspect fraud after examining). 

I really don't see the problem when things are moving more and more too cashless payments and we should not be going backwards into forcing places to accept cash as payment. So yes it would be stupid to introduce those kinds of laws in this day and age when in reality businesses want to sell their services so it's only a very very very small number of transactions that have any issues. 
It is well known that lots of places don't accept £50 notes simply because they don't want to issue large amounts of change and the higher loss if they are counterfeit. In your friends case they simply use an alternate form of payment so your making a much bigger issue of this "out of principle" and laws are meant to be practical and not implemented just for peoples "principles". 

JJ_Egan

Anyone betting on a hundred page thread ??

Ditzy_Mitzy

DoaM said:

Ditzy_Mitzy said:

Well, there's always the possibility of the restaurant owner issuing an invoice with payment terms to the diner.

Does an invoice have to include payment terms? If not then it can be argued that the bill presented after the service has completed is an invoice ... thus a debt exists rather than a "payment on the spot" situation.

/stirring the pot

I would argue that the bill isn't an invoice, as the situation remains one of payment on the spot until the point at which both parties agree that payment on the spot is not required.  The act notes that the payer knows payment on the spot 'is required or expected from him'; the social conventions of eating in a restaurant, it would be reasonable to argue, dictate that a diner pays on finishing his meal, therefore he should know that payment on the spot is required.
Separately, I see no reason why an invoice must include payment terms, but it would be silly for them to be omitted.  Doing so would give the recipient leave to argue that she'll pay it on the twelfth of never. 
/thank you for stirring the pot, the soup was delicious

Spank

I'd lose the will to live before it gets that far