Gavin Howe
Tender time contract law is a legal concept that revolves around the offer and acceptance of goods or services, typically in the context of sales and deliveries. It outlines the rights and obligations of both the buyer and the seller, ensuring fair and proper execution of the contract. This includes specifications regarding the place and manner of delivery, the quality and conformity of the goods, and the timing and methods of payment. Tender time contract law provides a framework for resolving disputes that may arise from non-conforming tenders, late payments, or other breaches of the contract terms. It also addresses scenarios where the buyer or seller fails to fulfil their obligations, outlining remedies and protections for both parties. Understanding tender time contract law is essential for safeguarding the interests of all involved parties and facilitating smooth commercial transactions.
| Characteristics | Values |
|---|---|
| Definition | A tender is an offer to do or perform an act which the party offering is bound to perform for the party to whom the offer is made |
| Payment | The whole sum due must be offered in lawful coin or foreign coin made current by law. Payment by bank notes is also acceptable if not objected to by the recipient |
| Delivery | If no place is expressly mentioned in the contract, the place of delivery is ascertained by the intent of the parties. The seller must put the goods in the possession of a carrier and make a reasonable contract for their transportation |
| Acceptance | Tender entitles the seller to acceptance of the goods and to payment according to the contract |
| Non-Conforming Tender | If a tender or delivery is rejected by the buyer because it is non-conforming, the seller may notify the buyer of their intention to cure and make a conforming delivery within the contract time |
| Installment Contract | An installment contract requires or authorizes the delivery of goods in separate lots to be separately accepted |
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What You'll Learn
Definition of tender
A tender is an offer to perform an act that the offering party is bound to perform for the other party. In other words, it is an invitation for a company to bid on a project. The term is commonly used to refer to the invitation to submit a bid for a project, usually a large bid from contractors for projects by governments and financial institutions.
Tender can have different meanings in business and finance. In finance, a tender offer is used in stock buybacks and in response to a takeover. For example, when the US Treasury auctions securities to large institutional investors, it uses the winning bid to establish the fair market value (FMV) for its securities. It then uses this value to set the price that smaller investors will pay during the non-competitive tender.
In the context of contract law, a tender is an offer to perform an act that the offering party is legally bound to perform. This can include the offer to pay a sum of money or to deliver a written instrument or specific personal property. For example, California Code of Civil Procedure § 2074 provides that "an offer in writing to pay a particular sum of money or to deliver a written instrument or specific personal property, is, if not accepted, equivalent to the actual production and tender of the money, instrument, or property."
The tender must be made at the place agreed upon for payment or, if no place is specified, then to the creditor or their authorized agent. The whole sum due must be offered in lawful currency, and the offer must be unqualified by any circumstances. If the amount tendered is not the exact amount due, it may not be considered a valid tender. For example, a tender of a $5 note demanding change would not be a good tender of $4.
Additionally, when specific articles or goods are to be tendered, they may be tendered at a particular place, rather than to the person of the creditor wherever they may be found. If no place is expressly mentioned in the contract, the place of delivery is to be determined by the intent of the parties and the circumstances of the case.
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Payment methods
The Tender of Payment clause defines the process by which a party meets its payment obligations under a contract by offering the required funds to the other party. In practice, this clause outlines the acceptable methods, timing, and conditions for making a payment. It specifies whether payment must be made in cash, by check, or electronically, and what constitutes a valid offer of payment.
The core function of the Tender of Payment clause is to clarify when and how payment obligations are considered satisfied, thereby reducing disputes over whether a payment was properly made or refused. When submitting a Notice of Exercise to the Company, the Participant will provide for the payment of the Exercise Amount through one or a combination of the following methods:
- Cash (including check, bank draft, or money order payable to the Company)
- A broker-assisted cashless exercise where the Participant instructs a broker to deliver to the Company proceeds of a sale of all or a portion of the Shares to be issued pursuant to the exercise
- Delivery to the Company of unencumbered Shares with an aggregate Fair Market Value on the date of the exercise equal to the Exercise Amount
- Authorizing the Company to retain, from the total number of Shares as to which the Option is exercised, a certain number of Shares with an aggregate Fair Market Value on the date of the exercise equal to the Exercise Amount
It is important to note that each jurisdiction determines what is considered legal tender, and it is generally mandatory to recognize legal tender in the discharge of a monetary debt from a debtor to a creditor. However, sellers entering into contractual relationships may contractually require payment using other methods, such as electronic transfers, foreign currencies, or any other legally recognized form of value. Additionally, specific regulations and laws may impact the use and acceptance of certain forms of legal tender, such as coins and banknotes.
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Delivery of goods
A contract for the delivery of goods should clearly define delivery terms, responsibilities, risks, and remedies. Delivery types include actual, constructive, and symbolic, each with specific legal implications.
Actual delivery refers to the physical transfer of an item to the buyer. Constructive delivery occurs without physical transfer, such as when the seller gives the buyer access or authority to retrieve the goods. Symbolic delivery involves handing over something symbolic of the goods, such as keys to a storage unit. Each type of delivery is recognised under commercial law and can establish when liability and ownership transfer.
In the context of delivery of goods, documentation is vital. Common documents include a bill of lading, which serves as a contract between the shipper and carrier and is often used as a title document, and a delivery note, which confirms the buyer received the goods and may include details such as quantity, date, and condition.
When drafting a contract for the delivery of goods, several key terms must be addressed to ensure clarity and minimise disputes. Delivery terms should specify how, when, and where the goods will be delivered. For example, if no place is expressly mentioned in the contract, the place of delivery is typically ascertained by the intent of the parties, taking into account the nature of the case and its circumstances.
Incoterms, or International Commercial Terms, are frequently used in international and domestic deliveries to define when ownership and risk pass from seller to buyer. Popular Incoterms include EXW (Ex Works), FOB (Free On Board), and DDP (Delivered Duty Paid). Including Incoterms in a contract can help avoid confusion and ensure legal compliance in cross-border transactions.
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Non-conforming tender
A tender is an offer to perform an act that the offering party is bound to perform for the party to whom the offer is made. The tender of payment is a condition of the seller's duty to tender and complete any delivery.
A non-conforming tender is a tender that does not meet the requirements set out in the Request for Tender (RFT) and the Tender Documents. A conforming tender, on the other hand, is a tender that meets all the requirements set out in the RFT and Tender Documents. Any acknowledgment of receipt of the tender by the council does not imply that the tender has been accepted as conforming or non-conforming.
The buyer may reject any non-conforming installment if the non-conformity substantially impairs the value of that installment and cannot be cured, or if it is a defect in the required documents. However, if the non-conformity does not fall under this and the seller gives adequate assurance of its cure, the buyer must accept that installment. Partial acceptance is permitted, as long as good faith and commercial reasonableness are used to avoid undue impairment of the value of the remaining goods.
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Buyer and seller rights
Tender time contract law relates to the rights of buyers and sellers when it comes to delivering and accepting goods, and the timeframes and conditions that apply.
Buyer's Rights
Buyers have the right to expect the seller to deliver the goods as specified in the contract, including the right goods, at the right time, and to the right place. If the seller fails to meet these obligations, the buyer has the right to reject the goods. This rejection must be made within a reasonable time after delivery or tender, and the buyer must notify the seller. If the buyer has taken possession of the goods before rejection, they must take reasonable care of them and hold them at the seller's disposal for a sufficient time to allow the seller to remove them.
Seller's Rights
Sellers have the right to expect the buyer to accept and pay for the goods upon delivery, as long as the seller has met the terms of the contract. If the seller delivers non-conforming or defective goods, they have the right to "cure" the issue, i.e., fix or replace the goods to match the contract specifications. The seller also has the right to determine the manner, time, and place of delivery, unless otherwise specified in the contract. If the contract does not specify a delivery location, the seller can deliver the goods to their own store or manufactory, or to any place reasonably appointed by the buyer.
Mutual Rights and Obligations
Both the buyer and seller have mutual rights and obligations under tender time contract law. For example, if the contract does not specify that the seller must ship the goods to the buyer, the seller must still hold the goods at the buyer's disposal and give the buyer the necessary notification to enable them to take delivery. Similarly, the buyer must provide the facilities reasonably suited to receive the goods, unless otherwise agreed.
Additionally, the concept of "perfect tender" is important in tender time contract law. This means that the goods delivered must conform exactly to the contract, and substantial performance is not enough to fulfil the seller's obligations. However, this requirement can be mitigated if the contract allows for delivery in lots, in which case payment can be apportioned accordingly.
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Frequently asked questions
A tender is an offer to perform an act that the offering party is bound to perform for the other party.
The perfect tender rule states that the seller is entitled to acceptance of the goods and payment according to the contract. Payment is due upon delivery of goods or documents of title to the buyer.
A valid tender of payment is typically made in the lawful coin of the country or foreign coin made current by law. In some cases, tender in bank notes or by check may also be accepted, provided it is for the exact amount due.
If a tender is rejected by the buyer because it is non-conforming and there is still time for performance, the seller may notify the buyer of their intention to cure and deliver a conforming tender within the contract time.
Unless otherwise agreed, all goods under a contract for sale must be tendered in a single delivery. If no place is expressly mentioned in the contract, the place of delivery is ascertained by the intent of the parties and the circumstances of the case.
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