Money Banking

Which one of the following statements correctly describes the meaning of legal tender money?

  1. The money which is tendered in courts of law to defray the fee of legal cases.
  2. The money which a creditor is under compulsion to accept in settlement of his claims.
  3. The bank money in the form of cheques, drafts, bills of exchange, etc.
  4. The metallic money in circulation in a country.


Legal tender money is a type of payment that is protected by law. Legal tender is also known as forced tender which is very secured and it is impossible to deny the legal tender while subsiding a debt which is assigned in the same medium of exchange.

In other words, the term legal tender does not represent the money itself, rather it is a kind of status which can be bestowed on certain types of money.

The correct option is B.