Bob Katter’s fury at having $50 note refused

Federal MP Bob Katter’s blow up at a cafe that would not accept his $50 note in payment for lunch has sparked a legal debate over your right to pay in cash. What do you think? TAKE OUR POLL

Federal MP Bob Katter’s blow up at a cafe that would not accept his $50 note in payment for lunch has sparked a legal debate over your right to pay in cash.

But there is no exact answer and even the Reserve Bank of Australia’s historian, Associate Professor Selwyn Cornish, has been left scratching his head.

“I have been asking that question for years,” Prof Cornish said. “It says on a bank note it is legal tender. So if it is, how can people refuse to take it?”

Mr Katter was outraged when staff at the Parliament House dining room refused payment in cash for a plate of fish and vegetables.

“Legal tender means you must accept it, it’s the law,” he said.

Bob Katter was not happy after his cash was rejected at a café in Canberra's Parliament House as payment for lunch. Picture: Supplied

However, according to the Reserve Bank website it is not as simple as that.

“Australian banknotes and coins do not necessarily have to be used in transactions and refusal to accept payment in legal tender banknotes and coins is not unlawful,” the RBA says.

It all comes down to the “contract” entered into before you purchase.

“If a provider of goods or services specifies other means of payment prior to the contract, then there is usually no obligation for legal tender to be accepted as payment,” it says.

So if you go into a car park that specifies card payment only, when you leave you cannot wave cash at the payment machine and argue that it must be accepted.

That changes if card payment has not been specified at the outset.

So if Mr Katter was not warned he had to pay by card beforehand he would be within his rights to insist on paying in cash.

If the cafe took him to court it would probably be ordered to accept the payment in cash.

None of this is enshrined in law and even the RBA says its comments on legal tender “are offered only as a guide”.

Do you have a story for The Daily Telegraph? Email [e-mail]