Money that has a legal sanction by the government behind it is called legal tender or legal tender money.
Legal tender or legal money means money under the law of land. It is the money issued by monetary authority or government which cannot be refused by any person in payment for transactions. The tender or payment of it constitutes by law the sufficient discharge of debt.
The government issues an order stating what money is and that becomes legal tender money. Everybody is bound to accept it in exchange for goods and services and in discharge of debts. None can refuse to accept it because non-acceptance is an offence. For example, in India currency (notes) and coins are legal tender money which cannot be refused in payment of transactions.
In this context, chequable demand deposit is not money because a person can legally refuse to accept payment through cheques. Legal tender status given by the government to money is of two types—limited legal tender and unlimited legal tender.
