Which one of the following statements correctly describes the meaning

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

The money which is tendered in courts of law to defray the fee of legal cases
The money which a creditor is under compulsion to accept in settlement of his claims
The bank money in the form of cheques, drafts, bills of exchange, etc.
The metallic money in circulation in a country
This question was previously asked in
UPSC IAS – 2018
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The correct answer is B.
Legal tender money is currency (coins and banknotes) that is legally valid for the fulfillment of a financial obligation. A creditor is legally compelled to accept legal tender in settlement of a debt. The refusal to accept legal tender money in payment of a debt discharges the debtor from the obligation to pay that amount.
Option A is incorrect as legal tender is not specifically for court fees, though it can be used for them. Option C is incorrect as cheques, drafts, and bills of exchange are types of “bank money” or “credit money” and their acceptance is voluntary, not compulsory legal tender. Option D is too narrow; while metallic money can be legal tender, the definition applies to any form of currency that the law designates as such, including banknotes, and the key characteristic is compulsory acceptance by creditors.

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