Question
Which one of the following statements correctly describes the meaning of legal tender money ?
(a) The money which is tendered in courts of law to defray the fee of legal cases
(b) The money which a creditor is under compulsion to accept in settlement of his claims
(c) The bank money in the form of cheques, drafts, bills of exchange, etc.
(d) The metallic money in circulation in a country
Answer:
B
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Explanation:
Legal tender money refers to the currency that must be accepted as a valid form of payment by law. When a debt or obligation is to be settled, the creditor is legally obligated to accept legal tender money as a means of payment. This ensures that individuals can fulfill their financial obligations using the recognized currency of the country, and creditors cannot refuse it as a form of settlement.