Definition and concept of legal tender

Legal tender money is defined as money which a creditor is under compulsion to accept in settlement of his claims. It is money that by law must be accepted as a medium of payment for debts and obligations. Legal tender has the force of law behind it - creditors cannot refuse it in payment. Option (a) is incorrect as it refers to court fees, not the definition. Option (c) is incorrect as bank money (cheques, drafts) is not legal tender in the strict sense - it is a substitute for money. Option (d) is incorrect as legal tender includes both metallic and paper currency, and all forms of legal money are legal tender. The key characteristic is the compulsory acceptance by creditors. > Definition: Legal tender = Money creditors MUST accept by law for debt settlement. Answer: (b).