At the turn of the seventeenth century the Case of Mixt Monies (1601), one of the most famous legal-tender cases in English history, upheld the principle in English-speaking countries that sovereign governments command the prerogative to confer legal-tender status on a monetary unit.
On 23 April 1601 Elizabeth Brett purchased 200 pounds of wares from a London merchant. Brett paid 100 pounds up front and committed herself to pay in September another 100 pounds sterling in current and lawful money of England. The September payment was also to be paid in Dublin, Ireland. An important complication occurred on 24 May when Queen Elizabeth sent to Ireland certain “mixt monies” from the Tower Mint, with official stamps and inscriptions, and proclaimed that the mixed money would be the lawful and current money of Ireland, at rate of a shilling for a shilling, and a sixpence for a sixpence, and that none should refuse it. The queen also proclaimed that after 10 July other money in Ireland would be valued only as bullion, and not as current money. The mixed money was of a baser alloy than England’s coinage and was not current and lawful money in England. On the day of payment, Brett tendered payment in 100 pounds of the mixed money, which, according to proclamation of the English crown, was current and lawful money in Ireland.
The London merchant protested, not wanting to accept the baser currency when the original contract specified sterling, and brought the dispute to court. The issue at hand was whether a time contract among parties required payment in the money that was current and lawful at the time the parties entered into the contract, or the money that was current at the time in the future when the contract specified that payment be made. The court found in favor of Brett, firmly sanctioning the right of the sovereign power to endow a monetary unit with legal-tender status.
The Constitution of the United States did not expressly confer upon Congress the power to endow a monetary unit with legal tender status, and forbade the states from declaring any money as legal tender other than gold and silver coins. In 1883 the Supreme Court upheld the right of the Congress to make a paper money issue legal tender, citing, among other things, that historically such a right belonged with the prerogatives of sovereignty.