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The Coinage Act 1971 and Legal Tender


Did you know that there’s a fixed value on what you can buy with two-pence pieces? Or that a legal quirk means there’s no legal paper money in Scotland? Read our article to find out more.


Have you ever saved up a jar full of two pence coins and taken them into a shop to buy something? Well, unless that something cost less than twenty pence, you could find yourself in a legal argument.


Under the Coinage Act 1971, one penny and two pence coins are legal tender only if used to pay for something that costs twenty pence or less.


A bill of up to five pounds can be paid for in five pence or ten pence coins, whilst for bills up to ten pounds, twenty pence and fifty pence coins can be used. Pound coins are legal tender for any amount.


Should an attempt be made to make a payment contrary to the Coinage Act, the shop or recipient is fully within their rights to refuse such a payment. Needless to say, such payments are accepted in the vast majority of cases although not always.


An Essex care home manager discovered this when he found himself in dispute with his accountant and decided to take revenge by paying an £804 bill using copper coinage in five boxes, which were left in the front garden of the bemused recipient.


The accountant knew his law, and successfully sued the care home manager for non-payment of the outstanding amount, since he had not used legal tender to do so.


The judge agreed with him and ruled that the payment was unacceptable. The care home manager was eventually left with a bill of £1118.62, covering the original debt and interest.


The precise definition of legal tender is something that is important when it comes to settling debts. A debtor cannot be successfully sued for non-payment if s/he pays into court in legal tender, regardless of the fashion in which the creditor would prefer to be paid. The care home owner in the case cited above would have been within his rights to pay the bill in 804 pound coins.


An ordinary transaction does not have to take place in legal tender; both parties are free to come to an agreement of their own regarding the means of payment.


It is an interesting fact that there is no legal right to demand change from a payment. Part of the service shops offer is to return change to customers who do not have the correct legal tender amount; they are not, however, obliged to. Nor do they have to accept Scottish banknotes in England, where they are not legal tender.


Curiously, Scottish banknotes are not even legal tender in Scotland. The Currency and Bank Notes Act 1954 defined Bank of England notes of less than £5 in value as legal tender in Scotland. Since 1988 and the withdrawal of the English £1 note, there is now no longer paper legal tender in Scotland.


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