The law on using commodities as money

R

rock3r

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NB: this is not a debate, it's simply a question of law

What is the legal status of using commodities as a means of payment?

If both buyer and vendor agree that consideration will be for a defined sum of a commodity, be it a barrel of oil, a shipment of high grade copper or a bar of gold, is such a contract enforceable in law?

I ask because various governments have stated that what it prints is legal tender and nothing else is allowed as legal tender.

Does this mean that a vendor is required, by law, to accept the legal tender amount in lieu of the commodity he specified?

What if a person wishes to be paid in precious metals? Is he able to specify that, and have it legally enforced?

Or is it the legal situation that he must accept paper money at all times?
 
I don't think that there is any rule to prevent barter. If I agree to provide you with 10 acres of land in exchange for 500 oz of gold, that would be legally valid. I doubt if I could substitute the € equivalent.

I agree to sell 10 acres to you for €100,000, you can only pay that debt in legal tender.

Brendan
 
I don't think that there is any rule to prevent barter either. However presumably any tax liabilities arising will need to be settled in legal tender and not pork bellies or the like?
 
But wouldnt tax liabilities be based upon a percentage of your profit?
If you own a pork belly or 2 then isnt that the same as owning rolled over capital ?

If you dont sell the pork bellies then your profit is zero.

If you dont carry any cash then how can the government take any away from you? They can take a percentage as tax of your pork bellies the way they did to Robin Hood but is there any legal requirement to use money or maybe pressure to raise funds to meet tax liabilities billed in legal tender?
 
I'd imagine it's simple enough- the parties must submit to the revenue a valuation of the commodities and pay their tax based on that. Naturally they must pay their tax in legal tender.
 
Hi

Just as an aside, am I correct in thinking Gold is still accepted as legal tender, given our currency originates from the gold system, with each Euro supposed to be worh X in gold (no doubt a very small amount ;)) ?

As I understood it, this was why the central banks retain so much gold, to underline the currency etc.

Cheers

G>
 
I think you'll find that the gold standard no longer applies for our legal tender or for anywhere else (although central banks do hold vast gold reserves to allow them to buffer their currency against fluctuating exchange markets and government decisions that damage a country's legal tender). Most countries broke with gold during the twentieth century.
The trouble with barter is having something to trade that your trading partner wants. Having fiat money or other portable, liquid, readily acceptable tokens of value allows trade to occur where you have something of value but it is not what the other party is looking for. Legal tender is simply a token that has been given status by a government and is guaranteed by that government to facilitate trade. Barter contracts are no less legal - just less flexible. Really all contracts are based on interlinked barters just lubricated by notes and coins! You trade your services to your employer who gives you tokens to trade for food in the shop you can't sell your service to, they in turn can exchange those tokens for services they do require to make sure that their shelves are stocked.
 
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