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

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 defence 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.