Suppose Bob and Alice are both U.S. citizens and Bob lends Alice 100 euros with 105 euros required to be paid back to Bob in exactly one month. A month later, Alice comes back with X amount of dollars which she claims is equivalent to 105 euros. Is Bob required to accept that as payment of the debt?

One obvious issue is that foreign exchange rates are continuously changing so Alice's claim may be accurate at that very moment in time, but may change slightly by the time Bob takes possession of the X dollars.

In addition, different foreign exchange exchanges and/or brokers may offer slightly different exchange rates, so who would decide if Alice's claim that X dollars was equivalent to 105 euros was "true"?

Another issue is that different foreign exchanges and/or different forex brokers may charge transaction fees, so forcing Bob to accept X dollars, even if X dollars were exactly equivalent to 105 euros according to all exchange rates, would be forcing Bob to take a loss since he would have to pay an exchange fee to get the euros he was originally promised.

So what happens in this situation given that Alice owes a debt and offers payment in terms of u.s. legal tender? Does the U.S. force Bob to take the X dollars as payment of the debt or not?


  • 5
    Is this a homework question? Whatever Alice and Bob agree to is the answer, isn't it? Put your loans in writing, solves a lot of problems.
    – Rocky
    Mar 12, 2021 at 23:42
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    Why would US citizens loan Euros and why would they be required to accept foreign currency? Who would "force" Bob to do anything?
    – BobbyScon
    Mar 13, 2021 at 0:06
  • 4
    This question might be better suited for law.stackexchange.com
    – 0xFEE1DEAD
    Mar 13, 2021 at 0:13
  • 1
    Regardless of whether Alice and Bob are U.S. citizens, does this take place in the U.S.A.? Because, that will change things significantly. Mar 13, 2021 at 18:24
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    I’m voting to close this question because the use of "legal tender" is utterly incorrect, so the question is completely unanswerable. And the answer to the question in para 1 is trivially "no". Unfortunately this QA can only lead to confusion and time-wasting, I'm afraid.
    – Fattie
    Mar 13, 2021 at 22:48

5 Answers 5


The value of the Dollars is not relevant, the loan is denominated in Euros and she agreed to pay Euros. She could also show up with a gold coin, or a full barrel of sweet crude oil, or any other commodity, none of which are Euros. She can sell her commodities for Euros and repay her debt. This has literally nothing to do with exchange rates or currency volitility.

This isn't different than going in to a store in the US, picking up a soda priced in USD but trying to pay with some equivalent amount of HKD. The shop keeper made stock available on offer with an asking price denominated in USD, you attempted to renegotiate the terms of the offer by changing the currency to HKD, the shop keeper has no obligation to accept your new offer, but can if he or she so chooses. Also, the US doesn't even force the shop keeper to accept cash, the shop is free to offer its goods available for electronic (debit/credit card, etc) payment only.

Your question is actually about contracts, contract creation, and the concepts of offer and acceptance; not the definition or limits of legal tender. When you transact with someone, a loan or purchase or whatever, you're entering in to a contract with that person. Contracts don't need to be written, a contract is made in any agreement. One party offering a change in the terms doesn't need to be, but can be, accepted by the other party. Terms of payment under the contract doesn't even really involve legal tender because the loan could have been denominated in tonnes of sand. You don't get to show up with an equivalent value of barrels of oil when you agreed to pay in tonnes of sand, because that's what you both agreed upon, unless the other party agrees.

If your question was about trying to pay your federal income tax using only sacks filled with pennies that would be a different story.

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    I follow you up until your last paragraph. The definition of legal tender is around the payment of debts as well as taxes and government fees so it would seem that the concept implies that legal tender is an acceptable form of either taxes OR repayment of some sorts of debt--but then, what sort of debt? Is the meaning of debt in the definition of legal tender ONLY dollar denominated debt? And if so, isn't specifying that u.s. dollar legal tender can be used to repay u.s. dollar denominated debt completely redundant? Mar 13, 2021 at 4:22
  • I got rid of a sentence because it's essentially irrelevant, but generally in the US legal tender is various forms of US Dollars, paper currency, coins, treasury notes. I think it's basically a relic of the gold standard and bygone time when banks were printing their own currencies in the US, but now that all US currency comes from Treasury it's basically irrelevant. And I have no idea what would happen if you showed up at the IRS with sacks of pennies because I don't know if the IRS is allowed to restrict payment methods, but your question is definitely about contract offer and acceptance.
    – quid
    Mar 13, 2021 at 4:59
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    I suppose another way to ask the question would be if Alice tried to pay the debt to Bob with a third party endorsed check, Sally writes Alice a check, Alice endorsed it over to the Bob. The check is denominated in USD but is it legal tender? At what point is a dollar denominated financial instrument legal tender? But a foreign currency is never legal tender.
    – quid
    Mar 13, 2021 at 5:08
  • I agree that the question is about contracts--more specifically, it's about debt contracts. I just can't wrap my head around what sort of debt contracts are meant by the definition. In your check example, I don't the IRS would accept such a check as payment for taxes so that wouldn't be legal tender. I also agree foreign currency is not legal tender, but that was never the question--the question involved the other direction (whether "legal tender" could be used to pay debts not denominated in legal tender, which I think you answered well). But I just can't understand what the purpose of... Mar 13, 2021 at 5:22
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    A stable coin is just another foreign currency or commodity depending on your definition. You need to think back a long time. At one point banks were just a building with a vault filled with piles of gold and silver that customers had mined and deposited. Currency was more like a bearer bond or IOU written by the bank. The problem was that people didn't trust the paper and wouldn't accept it, so regulations went in to place to define and force acceptance. But much more time has passed and we now have a homogenous currency, a federal reserve and treasury and a lot of old and new laws.
    – quid
    Mar 13, 2021 at 6:38

If Alice and Bob can’t agree on how much money it takes to discharge the debt, then Bob has the choice of accepting what Alice is offering anyway or going to court and having the court decide how much he should be repaid. The fact that dollars are legal tender doesn’t enter into it, except insofar as Bob will eventually have to settle for some number of dollars and can’t insist on being repaid in actual euro.


This question should be in the law section rather than here, however, I would point out a number of relatively simple solutions to this question.

First, a Euro is not money, it is a commodity. Commodities law covers contracts like these right now. Gold and corn are similarly covered. A euro is a thing.

There is clearly a common law contract present here, whether it conforms to state law is another matter altogether. It may be valid in Louisiana too if certain things were done that are not present in the example, as it is a civil law jurisdiction.

Nothing about legal tender law says that there is a requirement of contracts to be denominated in money. It is perfectly legal for you to sell me ten elephants today in exchange for an acre of land to be delivered in one month. Delivery of anything else is a breach of contract. Not only are you breaching it if you offer money, in lieu of land, but also if you offer me alternate land or eleven elephants, subject to the laws of the state the contract was made in.

With that said, federal law allows the payment of debts, explicitly, in things other than money under certain statutory exceptions. For example, if, during the refinance of a primary residence by another lender than the original, a right to rescind the contract is not offered at the end of three days, then the borrower may repay the loan without interest for up to three years. The law says the borrower is not required to pay in money if it would be unfair to the borrower.

Now, let us imagine that the contract for euros was breached, a judge is going to require the payment of damages in dollars. It may also require the payment of court costs, attorney fees, and any expenses the original party had in getting money converted to euros using their own money.

It would also likely matter, in many jurisdictions, as to whether the use of dollars or euros was material to the contract by the counterparty. For example, if the lender was going to use the money as payroll in Germany, then the euros matter. If they were just going to convert it back to dollars later, it might not matter.

The legal tender cases the courts have heard have focused on transactions in dollars. The original one happened when a contract to deliver cotton in exchange for roughly $5100 was made. The seller wanted delivery in gold coins and not just any dollars. The court held that the seller had to accept paper money, even though greenbacks were not backed in gold.

Barter exchanges that involve no money at all are rather common, even today, in agricultural areas. It is not uncommon in agricultural areas in America to allow the use of land as a leasehold in exchange for the use of some farm equipment for a fixed amount of time also in an equipment leasehold.

It is important to understand how money would not work as an alternative here. If I give you my land in exchange for the use of a combine over a fixed date, then offering me the cash rental value of my land may result in the loss of crops on hundreds or thousands of acres. The value to the user of the equipment may vastly outweigh its market rental value or the value of the land. Common law does not require any form of parity of value, though civil law can.

If you sell me a van Gogh for $10, not understanding its value, then that is a valid common law contract. It is not a valid civil law contract, though. You would have a problem in Louisiana.

A euro is not money unless you are standing in the European Union.

The original legal tender law required foreign currency to be treated as U.S. currency for purposes of fulfilling contracts denominated in dollars. That is how the idea of legal tender originated. It wasn't to require people to accept U.S.-produced money. It was to require people to accept foreign currency as if U.S. currency because of the inability of the government to produce enough of its own.

Indeed, Mexican currency was quite often the primary currency in areas of the U.S. many decades after legal tender law changed in 1857, to not accept the use of foreign currency for the payment of U.S. taxes.

The original purpose of the law was not to create an alternative to the performance of a contract but to require that any contract denominated in dollars could be paid in the money of other nations at specific ratios. It also made the Treasury accept foreign currency in the payment of taxes.

Once the government had matured to the point it could provide a stable currency, it banned foreign money for the payment of taxes or debts denominated in dollars. Instead, the foreign money could be turned in to the Treasury to be melted down for a fee or exchanged in the money markets.

Basically, what legal tender implies is that if you are owed $1,000 for a debt and someone brings you $1000 in U.S. money, then you must accept it. If you argue that the legal value of one ounce of gold is $20 and you want 50 gold coins of twenty dollars each, the court will not support your demand.

Also note that if your contract would require you to deliver $1,000 in twenty-dollar bills, then you would be required to deliver them in twenty-dollar bills. You can agree to more binding conditions if both parties choose to. In that case, delivering ten $100 bills is a breach of contract, though I suspect that unless there were real, measurable damages, that a court would reject the claim. An example of such a case might happen in a vending machine company where they need $1000 in quarters. It would be a breach to deliver hundred dollar bills and if it prevented a day's worth of sales, then you would be liable for the losses.

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    “A euro is not money unless you are standing in the European Union.” This is untrue; euros are money in Andorra, Kosovo, Montenegro, Vatican City, Monaco, San Marino, Akrotiri & Dhekelia, French Southern & Antarctic Lands, Saint Barthélemy, Saint Martin and Saint Pierre et Miquelon, none of which are EU members.
    – Mike Scott
    Mar 13, 2021 at 8:21
  • So if a town decided to use a local currency, merchants there would be allowed to reject dollars, as the contract stipulates to use the local currency? Mar 13, 2021 at 11:30
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    @SimonRichter Merchants can reject or accept any kind of currency they want (in the US, unless some local law restricts them further). Buying something isn't a "debt". Straight from the horse's mouth: federalreserve.gov/faqs/currency_12772.htm Mar 13, 2021 at 20:48

Legal tender statute below, emphasis mine.

Section 31 U.S.C. 5103, entitled "Legal tender," 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.

Also worth noting that the Federal Reserve states:

There is no federal statute mandating that a private business, a person, or an organization must accept currency or coins as payment for goods or services. Private businesses are free to develop their own policies on whether to accept cash unless there is a state law that says otherwise.

Seeing as this appears to be an informal agreement between 2 individuals with no apparent contract, Bob can do whatever he wants. Might result in him and Alice no longer being friends. If I was Bob and cared about having Euros in-hand, I'd tell Alice to go to her bank and get 105 Euros and she can deal with conversions. Alice could refuse, leave the US cash and then never talk to Bob again.

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    The question is intended to mean a legal contract not an informal agreement. The purpose of the question is, per the title, to explore the boundary of what "legal tender" actually means and your reduction to an informal agreement completely bypasses that purpose. The linked definition is nice, but it also doesn't explain what would happen to resolve the dispute between Bob and Alice. Mar 13, 2021 at 0:35
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    I think this is the perfect example why this question should be on legal.
    – DonQuiKong
    Mar 13, 2021 at 8:13
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    What do you mean no contract? They most definitely have a contract: They have an offer. (Bob to Alice: I will give you 100 Euros now if you give me 105 Euros next month.) They have acceptance. (Alice taking the 100 Euros.) And they have consideration. (Alice gets the money now, Bob gets 5 Euros more than he had next month.) That's literally all you need. katzlawgroup.com/are-verbal-contracts-enforceable Mar 13, 2021 at 20:54

Is Bob required to accept that as payment of the debt?

The simple answer is

"No, of course not."

The very long answers/comments are frankly quite confusing.

Also note that the use of "legal tender" is totally, absolutely, completely wrong in the title/question. (So the further "questions" about it are totally misguided/unanswerable.)

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