According to Section 38, when the performance becomes due and the promisor offers to perform his obligation however, the promisee refuses to accept the performance, this is referred to as an attempted performance or tender. For example, A promises to deliver certain goods to B. A takes the goods to the appointed place during business hours but B refuses to take the delivery of the goods. Thus, this is known as attempted performance from A.
The promisor is not held liable in case of an attempted performance or tender for non-performance. The Section also states that, “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 rights under the contract.”
Tender can be of two types:
- Tender of goods and services: A contract to deliver goods or render some service is completely discharges when the goods are tendered for acceptance as per the terms of the contract.
- Tender of money: When the debtor offers to pay the amount to the creditor and the creditor refuses to accept the same, this does not discharge the debtor from his liability to pay the amount.
Essentials of a Valid Contract: Even though a tender of performance discharges a party from any further liability, however, it must satisfy the following conditions in order to be valid:
It must be unconditional: An unconditional tender is the one which is in accordance with the terms of the contract. That is, the other party has the right to reject a conditional offer of performance. For example: A, a debtor, offered to pay B, his creditor, the amount due to him if B sells certain goods to him. It is a conditional tender and thus invalid.
It must be made at a proper time and place: It is important that the tender is performed as per the time and place of the performance agreed in the contract.
For example: If the promisor wants to deliver the goods at I am, this is not a valid tender unless it was so agreed.
In case of tender of goods, it must give a reasonable opportunity to the promisee of ascertaining that the goods, offered are the same as the promisor is bound to deliver: In other words, a tender is not valid when the other party cannot inspect the goods.
It must be trade for the whole obligation: A piecemeal tender of goods or to pay the amount in installments is not considered as a valid tender. For example: A, promises to deliver 100 bags of rice on a certain day. If on the agreed day and place A offers to, deliver 80 bags only, This is not a valid tender and A is not discharged from his obligation.
It must be made to the promisee or his duly authorized agent: In case of joint promisees, there is no need to offer performance to each promisee from the promisor. Similarly, a tender to a stranger is not valid.
In case of payment of one tender must be of the exact amount due and it must be in the legal tender: A cheque may be considered as a valid tender if the other party is ready and willing to accept it. Also that it should not be any other form such as foreign currency or cheque.