This is an extract of our Character Of Money document, which we sell as part of our Personal Property Law Notes collection written by the top tier of Oxford students.
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Character of Money Money is a social fact Money is a social fact created by social usage in a particular country. The law cannot create money but it can facilitate the use of a certain kind of asset as money e.g. by conferring legal tender status on it or by applying a favourable system of property rights to it. Not all money is legal tender. When a debt is owed, it is not deemed to be paid until the creditor accepts the tender of the debtor. Legal tender gives the debtor a means to compel the creditor to accept the tender. Is the creditor fails to accept legal tender, and then tries to sue, he will be unable to obtain any alternative and will have to pay the other side's costs. All Bank of England notes are legal tender (Currency and Banking Notes Act s.1 (2)) Cupro nickel coins more that 10 pence are legal tender up to PS10. Cupro nickel coins not more than 10 pence are legal tender up to PS5. Copper coins are legal tender up to 20p. Once legal tender has been offered then the creditor is obliged to accept it. However the debtor must then place the tender separately so he is not earning interest and benefitting from the creditor's assets. (Edmonson v. Copland) Mann says that legal tender status is vital to determining what is money. Fox disagrees, he says legal tender status merely helps to determine primary sources of money and then other sources of money can be defined from that. Does legal tender status matter today?
Legal tender limits are practically unimportant in almost all private commercial transactions BUT
Legal tender defines the primary form of money, to which all other forms of money are reducible.
All secondary money forms involve obligations denominated in monetary units of account which can ultimately be discharged by payment of legal tender.
The exercise of sovereign power to issue money with legal tender status is one sign that a monetary system is legally independent.
Money defined by its functions Medium of exchange
- a means of facilitating exchange transactions without needing to resort to the barter of commodities
- derives its value from the usability, the fact that it can be exchanged for something else
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