What is meant by the offer of performance or tender? What conditions must be fulfilled to make it a valid tender? What are the incidents?

Question: What is meant by the offer of performance or tender? What conditions must be fulfilled to make it a valid tender? What are the incidents? [RJS 1969]

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Answer

Offer of performance is given in Section 38 of the Indian Contract Act, 1872. The provision lays down the effect of refusal to accept the offer of performance. It states:

“Where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promisor is not responsible for non-performance, nor does he thereby lose his right under the contract.”

Every such offer must fulfil the following conditions:—

• • It must be unconditional;
  • It must be made at a proper time and place, and under such circumstances that the person to whom it is made may have a reasonable opportunity of ascertaining that the person by whom it is made is able and willing there and then to do the whole of what he is bound by his promise to do;
  • If the offer is an offer to deliver anything to the promisee, the promisee must have a reasonable opportunity of seeing that the thing offered is the thing which the promisor is bound by his promise to deliver.

“An offer to one of several joint promisees has the same legal consequences as an offer to all of them.”

Incidents of Offer or Tender of Performance

The promisor must offer to perform his obligation under the contract to the promisee. This offer is called “tender of performance“. It is then for the promisee to accept the performance. If he does not accept, “the promisor is not responsible for non-performance, nor does he thereby lose his rights under the contract”.

In other words, the tender of performance, if rejected by the other party, excuses the promisor from further performance and entitles him to sue the promisee for breach of the contract. Thus, a tender of performance is equivalent to performance. This is the effect of Section 38.

Illustration: ‘A’ contracts to deliver to ‘B’ at his warehouse, on the 1st March 1873, 100 bales of cotton of a particular quality. In order to make an offer of performance with the effect stated in this section. A must bring the cotton to B’s warehouse, on the appointed day, under such circumstances that ‘B’ may have a reasonable opportunity of satisfying himself that the thing offered is cotton of the quality contracted for and that there are 100 bales.

Conditions must be fulfilled to make it a valid tender

1. The tender of performance must be unconditional [Section 38(1)]

The tender of performance must be unconditional. A tender becomes conditional when it is not in accordance with the terms of the contract. For example, a tender of an amount less than what is due under the contract is not an effective tender.

2. The tender of performance must be made at proper time and place [Section 38(2)]

The tender of performance must be made at proper time and place, and under such circumstances that the person to whom it is made may have a reasonable opportunity of ascertaining that the person by whom it is made is able and willing there and then to do the whole of what he is bound by his promise to do.

Often the time and place of performance are fixed by the parties in their contract. The tender of performance must be made within the time and at the place so fixed. If it is so made, the promisor is under no further responsibility, if the tender is not accepted. This was established as early as 1843 in the leading case on Startup v. Macdonald [(1843) 64 RR 810]

In the case, the defendant bought of the plaintiff ten tons of linseed oil to be delivered within the last 14 days of the month of March. The plaintiff tendered on the last of the fourteen days at 9 o’clock at night. The defendant refused to accept owing to the lateness of the hour.

He was held liable for the breach as the jury found that, though the hour was unreasonable, there was time for the defendant to have taken in and weighed the goods before midnight. He should, therefore, have accepted the tender, and “then no doubt, the contract would have been literally performed”.

3. Other party must have reasonable opportunity to ascertain the goods [Section 38(3)]

The tender must be made under such circumstances that the other party gets a reasonable opportunity of ascertaining whether the person making the tender is able and willing to fulfil the whole of his obligation under the contract.

If the tenderer has to deliver something to the promisee, the latter must have a reasonable opportunity of seeing that the thing offered is the thing which the promisor is bound by his promise to deliver. In other words, the goods tendered must be of the contract description, otherwise, the tender is not valid.

Tender by one joint promisee is sufficient

If there are several joint promises, it is not necessary for the promisor to offer performance to every one of them. A tender made to any one of them has the same legal consequences as a tender to all of them.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X