Linked
<<Claim: U.S. law specifies that a creditor does not have to accept more than 100 pennies towards the payment of a debt or obligation.
Status: False.
Origins: This is one of the pieces of misinformation that makes me wish web sites like this one had been around when I was a kid so I have could pointed my father toward it and told him to shut up already. I can't recall how many times he solemnly intoned that "Pennies are not legal tender in quantities greater than 100" and therefore merchants were "legally" allowed to refuse any offer of payment that included more than one hundred one-cent coins (and, presumably, could not "legally" refuse payment offered in any other form of legal tender). As with so many other things he was dead wrong (and I knew it even then), but I had no way of proving him wrong. There's still hope for some of you younger folks, however.
Title 31 (Money and Finance), Subtitle IV (Money), Chapter 51 (Coins and Currency), Subchapter I (Monetary System), Section 5103 (Legal Tender) of the United States Code states:
United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.
What this statute means, in the words of the United States Treasury, is that "[A]ll United States money . . . is a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal law mandating that a person or organization must accept currency or coins as for payment for goods and/or services."
That's it. All this means is that the Federal Reserve System must honor U.S. currency and coins, not necessarily anyone else. U.S. currency and coins can be used for making payments, but a debtor does not have to pay in legal tender, nor does a creditor have to accept legal tender. A creditor can accept all U.S. currency and coins as payment, he can accept no U.S. currency or coins as payment, or he can pick and choose which currency and coins he will accept. As a creditor, you can accept checks, credit cards, and money orders only if you so choose. If you don't want to accept currency in denominations higher than $20, you're perfectly entitled to do so (and plenty of establishments have such a policy). If you want to decline more than 25 pennies as payment, you're allowed. If you don't want to be paid in anything other than nickels, you can specify that. If you make a deal to trade your '57 Chevy for six elephants, you don't have to accept cash in lieu of the pachyderms. Likewise, the other party in the transaction can offer whatever he wants as payment, as long as you're willing to accept it. No law says I can't offer you 500 comic books as payment for your boat, just as no law requires you to accept 500 comic books as payment for your boat.
As a general legal principle, however, it is assumed that payment will be made in general legal tender unless otherwise stated. If you won't accept anything larger than a $20 bill in your store, you'd best state that up front or post a sign to that effect. If you agree to sell your '57 Chevy for $8,000, you can't later claim that you really wanted $8,000 worth of elephants. If you advertise bananas for $2 a bunch but want to be paid only in dimes, you should include that requirement in the advertisement to avoid any legal complications. Likewise, if I agree to buy your pinball machine for $500, I can't later insist that you accept $500 worth of Italian gold coins for it.
In the old man's defense, I should point out that he wasn't completely wrong, just hopelessly out of date. Up until the late 19th century, pennies and nickels weren't legal tender at all. The Coinage Acts of 1873 and 1879 made them legal tender for debts up to 25 cents only, while the other fractional coins (dimes, quarters, and half dollars) were legal tender for amounts up to $10. This remained the law until the Coinage Act of 1965 specified that all U.S. coins are legal tender in any amount.>>
This article isn't entirely accurate. I've seen news of a court upholding the right of a bank to refuse payment in pennies, from a case where one man went so far as to try to pay his mortgage with pennies. There is a federal law that prohibits excessive use of coinage, be it legal tender or not.
Facebook
Twitter