Legal Tender Optional Money
Money is different not only on the basis of the relationship between its monetary usage and commodity usage but also from the standpoint of the law.
Certain kinds of money are granted ‘legal tender’ power by the government. They are legal tender money. It is that money which every individual is bound to accept in exchange for commodities and services, and in the discharge of debts. The legal tender status given by a government to a certain kind or kinds of money may limited or unlimited.
(1) Limited Legal Tender Money is that money which no person can be forced to accept beyond a certain maximum limit. The maximum limit is fixed by the government under statute. In our country, coins of small denominations are limited legal tender money.
(2) Unlimited Legal Tender Money is that money which a person has to accept upto any limit because it is an unlimited legal tender. This type of money is accepted by the people to an unlimited extent. In our country, two-rupee coin, one-rupee coin, half-rupee coin and paper notes of all denominations are unlimited legal tender money.
Optional Money is non-legal tender but is generally accepted by the people in final payments. It consists of credit instruments like bills of exchange, cheques, handiest, etc., which do not enjoy any statutory backing. Nobody could be forced to accept this type of money. The acceptance of optional money depends upon the choice of a person.
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