Earlier this year, the Bank of England announced that it was withdrawing the legal tender status of the then current £50 note (known as the Houblon note, being the name of the first Bank Governor whose portrait was shown on it). So, what did that mean?
Legal tender is one of those expressions which is widely used, but its actual meaning is commonly misunderstood. In England and Wales, only bank notes issued by the Bank of England have legal tender status; although certain Scottish and Northern Irish banks are authorised to issue their own bank notes, such notes are not legal tender. In fact, strictly speaking, no bank note (even ones issued by the Bank of England) qualifies as legal tender in Scotland or Northern Ireland.
The actual meaning is quite a narrow one and relates to the settlement of debts – if a debtor pays into court the exact amount owed under a contract in legal tender and the contract does not specify another means of payment, the debtor cannot be successfully sued for non-payment of the debt. It does not mean that only legal tender can be used in a transaction – parties are free to agree on any form and method of payment, whether legal tender or otherwise.
…and my Houblon notes?
The Houblon £50 notes formally ceased to be legal tender on 30 April but certain banks have agreed to accept them (up to a limit) until 31 October. However, each Bank of England note famously states “I promise to pay the bearer on demand…” – the Bank will always exchange “old” notes for current ones of the same face value.
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