Currency that a debtor may lawfully use to discharge a debt and that a creditor must accept.
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Cases
Statutes
Uniform Acts
How its tested
Common Examples
6
State Currency Restriction
Lars Lindstrom owed property taxes to his state. The legislature had enacted a statute permitting payment in digital tokens. Lars tendered the tokens at the county office. The clerk rejected them and demanded gold or silver coin instead. Lars's obligation remained unpaid until he obtained the required coin.
Merger Share Exchange
Lumen Capital shareholders received a merger offer from Lattice Systems. The board recommended that shareholders tender their shares in exchange for cash. Several shareholders delivered their certificates and received payment in legal tender at the closing.
Loyal Insurance had converted Lola Langley's classic car under a good-faith mistake. After discovering the error, the insurer promptly offered to return the vehicle. The court reduced damages because the tender of the chattel satisfied the statutory conditions.
Market Price Location
Lena Lawson contracted to buy grain from Landmark Realty. The seller repudiated before delivery. The court measured damages using the market price at the contract's place for tender. Lena received the difference between that price and the contract price.
Foreclosure Cure Payment
Lucas Lee defaulted on his home mortgage. Two days before the foreclosure sale he tendered all amounts due without acceleration plus foreclosure expenses. The lender accepted the payment and canceled the sale.
Prompt Chattel Tender
Lila Lin converted a painting from Lorenzo Lugo under a reasonable mistake about ownership. Upon discovering the error she immediately offered to return the painting and kept the offer open. The court diminished damages because the prompt tender met the required conditions.
4 common questions
Students Frequently Ask...
What forms of payment qualify as legal tender under the Constitution?
Only gold and silver coin qualify. States may not declare any other form of payment as legal tender for debts.
Supporting sources
Does a check constitute legal tender?
No. A check is only a conditional tender. Legal tender requires actual currency that the creditor must accept without further action.
When must a tender of payment occur to cure a mortgage default?
The borrower must tender all amounts due absent acceleration plus specified foreclosure expenses before the sale occurs.
Supporting sources
How does tender of return affect conversion damages?
A prompt tender of the chattel made in good faith after discovery of a mistake may reduce the damages awarded if the value remains unimpaired.
Supporting sources
290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413 (1934)
…and these bodies passed, among other acts, the following: laws providing for the emission of bills of credit and making them legal tender for the payment of debts, and providing also for such payment by the delivery of specific property at a fixed valuation; instalment laws, authorizing payment of overdue obligations at…