In order to be a valid tender or offer of performance, it must fulfill the following conditions.
Essentials of Valid Tender
1. Tender must be Unconditional
There must not be any condition associated with the tender. The tender should be unconditional. In order to be legally enforceable, a tender should not only be in accordance with the contractual terms, the promisor should also not attach any condition to it, because it is not reasonable to compel the other party to accept a changed or otherwise modified performance, whatsoever.
A, the debtor, offers to pay B, the creditor, the amount due to him if B sells some goods to him. It is a conditional tender and therefore is not a valid tender.
A sent a single cheque for two items, only one of which was due at the time, while the other was payable after sometime. The cheque being one and indivisible could be accepted as whole or not at all. It was held that the promisee was within his right in rejecting cheque
2. Tender must be made at a proper time and place
A tender should be made at the proper time and place. Generally, the time and place of performance are fixed by the parties in their contract. If a person’s obligation is to deliver goods or render services, they must be tendered at a reasonable hour, for example, not in the middle of the night. If such a tender is refused, it will not release the tendering party from further obligation.
A entered into a contract with B to deliver at his godown, 100 bags of rice of a particular type and quality on 31st March 2001. In order to make a tender valid, A must bring the rice to B’s godown on 31st March 2001.
If the place is not mentioned, the rule is that the debtor must find the creditor. Where no time is fixed then it is valid to make the tender at any reasonable time. What is proper time and place is a question of fact depending on the circumstances of each case. However, a tender before due date is not valid.
A owes B Rs. 1,000 payable on 1st June with interest. B offers to pay on 1st May the amount with interest up to 1st may. It is not a valid tender, as it is not made at the appointed time.
3. Chance of Adjudging
A tender must be made under such circumstances that the person to whom the tender is made shall have a fair amount of chance of adjudging that the person by whom the tender is made is able and eager and then proceed with what he is bound by his promise.
For example, if a debtor sends money by post and it is lost, he will have to pay again, unless the mode of delivery was requested by the creditor, and the debtor took reasonable care.
4. Must be for Agreed Quantity and Quality
If the offer is to deliver a particular thing to the promisee, the promisee must have a reasonable opportunity of seeing that the thing offered is the same that the promisor is bound by his promise to deliver.
For example, if a seller tenders too few goods, too many goods, or the right amount of goods mixed with other goods, the buyer may reject all of them because the performance is not exact. The buyer can also reject the tender where the goods are not packed in accordance with the contract.
5. Whole Obligation
The tender must be of whole and not of that part. Tender in part is no tender. Moreover, a tender by installment is not a valid tender unless the contract so provides.
A contracted with B to deliver 100 BPL Washing Machines on 1st January 2001. A offered only 60 machines to B on the appointed day. It is not a valid tender. Here if B refuses to accept, A is not discharged from his obligations.
6. Should be made to the Proper Promisee
A tender of performance made to a stranger i.e. third party is not a valid tender. It should be made to the promisee or his duly authorized agent.
A contracted with B to deliver 50 sets of Onida TV to him on 1st June 2016. A offered the goods to C. the neighboring shop owner of B. It is not a valid tender of performance. Thus A is not discharged from his obligations.
7. Reasonable Opportunity to Inspect
When a tender of goods is made by the promisor, a reasonable opportunity must be given to the promisee to inspect the goods to enable him to see whether the quality of the goods is as per the contract.
There is no valid tender where goods are locked in a box and the other party is not allowed to open it. The usual place of inspection is the place of delivery. If the buyer is not able to inspect a tender made at late hour, it will not be considered a valid tender.
A contracts to deliver to B at his warehouse on 1st January 2016, 100 bags of rice of a particular quality. A must bring the rice to B’s warehouse on the appointed day under such circumstances that B may have a reasonable opportunity to satisfy himself that the rice offered is of the quality contracted for and that there are 100 bags of rice.
7. Should be made in Legal Tender
In case of payment of money, tender must be of the precise amount and in terms of legal tender money If a debtor offers to pay by cheque or a promissory note, it is not a valid tender. Likewise, if the debtor offers goods or gold or silver, the creditor has a right to reject the tender as it is invalid tender.
8. May be made to any one of the Joint Promisees
If there are several joint promisees, it is not necessary for the promisor to offer performance to every one of them. An offer to one of several joint promisees has the same legal consequences as an offer to all of them.
9. Ability and Willingness to Perform the Obligation
The party making a tender must be in a position and willing to perform his promise. A party cannot be said to be able and willing if he has neither possession of nor control over the goods he had promised to deliver.
Rules regarding payment of money for Tender
As regards payment of money, a tender must comply with the following rules.
1. A tender must be in accordance with the rules relating to ‘legal tender‘. For instance, a tender of notes of any bank other than the Reserve Bank of India is not legal tender, even though the creditor may waive his objection to the tender, if he wishes. If a debtor offers Rs. 100 towards the payment of Rs. 3,000, it will not be a legal tender although it is worth much more than collector’s amount.
2. There must be no request for change. In other words, exactly the right amount of cash must be tendered. For example, if someone offers a Rs. 1000 note for the settlement of Rs 600 debt, the same will not release the debtor from his obligation to pay, since it is not reasonable to compel the creditor to provide change.
3. Tender by cheque, or any other negotiable instruments such as a debit card or credit card is not a good tender, unless the creditor does not object. It should be noted that if a proper tender of money is refused, the debt is not discharged, but if the money is paid into court, the debtor has a good defense to an action by his creditor, and the debt does not bear interest.
4. An offer to one of the several joint promises has the same legal consequences as an offer to all of them.