One of the necessary functions of government is the adjudication and final settlement of contested rights and contracts; another is the levy and collection of revenue and the quittance of the revenue payer from obligation. To perform these functions, it is necessary for the state to legislate as to which coins of the realm are legal tender in payment of debts contracted in terms of money, and which are acceptable to the state in settlement of revenue obligations and court decrees.
A legal-tender law determines the debt-paying power of coins and has no reference to their purchasing power, which may differ from their debt-paying power. A legal-tender law, moreover, pertains only to debts contracted or decrees handed down in terms of the'money in general, and does not prevent contracting parties from naming the specific money in which payment is to be made. If a debtor offers a legal tender in settlement of his debt, the creditor is obligated to accept this or receive nothing. The legal-tender quality may be defined in law as to its extent, that is, it may be full and unlimited, or limited. For example, certain foreign coins may be made legal tender at a specified discount from their face amount, or, as is the case in the United States, silver half-dollars may be made legal tender for $5 or less in one payment.