The term "legal tender" or "legal money" refers to money that is subject to the laws of the land. It is money that is issued by a monetary authority or the government and cannot be denied as payment for transactions by anyone. The government issues an order defining money, and that money becomes legal currency. Everyone is obligated to accept it in exchange for products and services, as well as for the repayment of obligations.Legal tender money includes currency, paper notes, and coins, which cannot be refused as payment for transactions or as a means of exchange.
The currency that a government declares to be legal tender is called fiat money but is not backed by a physical asset. The value of fiat money is determined by the connection between supply and demand rather than the worth of the commodity used to make the money.