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Legal Tender, Debt, and the Institutional Settlement of Monetary Obligations in English Law

Author

Listed:
  • Neil Wilson
  • Richard Tye
  • Andrew Berkeley

Abstract

This paper challenges the widespread public and institutional misconception that legal tender laws in English law compel creditors to accept payment in a specific form. We argue that legal tender is a narrow, procedural artefact with diminishing practical relevance. Through an analysis of statutory provisions, common law, and the Civil Procedure Rules, we demonstrate that legal tender serves not as a substantive right to discharge debts but as a limited procedural defense concerning liability for costs in litigation. By examining the institutional mechanisms for settling private contractual debts and public statutory obligations, such as taxes, we show that settlement occurs almost exclusively through electronic, bank-mediated systems. The paper concludes that the operational currency of the modern state is not physical legal tender but central bank reserves and commercial bank money, rendering legal tender a concept of largely historical and symbolic significance.

Suggested Citation

  • Neil Wilson & Richard Tye & Andrew Berkeley, 2026. "Legal Tender, Debt, and the Institutional Settlement of Monetary Obligations in English Law," Economics Working Paper Archive wp_1103, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_1103
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    References listed on IDEAS

    as
    1. Tony Lawson, 2022. "Social positioning theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 46(1), pages 1-39.
    2. Mann, F. A., 1992. "The Legal Aspect of Money: With Special Reference to Comparative Private and Public International Law," OUP Catalogue, Oxford University Press, edition 5, number 9780198256502.
    3. Fox, David, 2008. "Property Rights in Money," OUP Catalogue, Oxford University Press, number 9780198299455.
    4. Andrew Berkeley & Richard Tye & Neil Wilson, 2023. "How does the government spend? A functional model of the UK Exchequer," Chapters, in: L. R. Wray & Phil Armstrong & Sara Holland & Claire Jackson-Prior & Prue Plumridge & Neil Wilson (ed.), Modern Monetary Theory, chapter 1, pages 1-40, Edward Elgar Publishing.
    5. Fransiska Ari Indrawati, 2023. "An Ideal Legal Tender For The Digital Era," Journal of Central Banking Law and Institutions, Bank Indonesia, vol. 2(3), pages 373-400, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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