Tender Definition in Law and Contracts

Key Takeaways

• Tender definition in law refers to a formal offer to fulfill a contractual obligation, which can involve money or specific articles.
• A valid tender must meet specific legal requirements: correct timing, full payment, proper party offering, and fulfillment of any conditions.
• Properly made tenders can serve as a complete defense against claims of nonperformance if the creditor refuses without valid reason.
• Specific article tenders often require delivery at an appropriate location, typically the seller’s place of business or a reasonable place agreed upon by parties.
• Modern legal contexts also recognize tenders in business transactions, government bidding, and contract performance disputes.

Legal Definition of Tender

A tender is an offer to do or perform an act which the party offering, is bound to perform to the party to whom the offer is made. A tender may be of money or of specific articles; these will be separately considered.

Broader Context of Tender in Law and Business

In legal and commercial practice, the tender definition extends beyond simply offering payment. A tender may involve:

• Formal bids for contracts or projects, particularly in government procurement and public works.
• Settlement offers in disputes, where one party offers to perform its obligation to avoid litigation.
• Financial instruments, such as tender offers in corporate transactions, where companies offer to buy back shares from shareholders.

Understanding the broader tender definition is crucial because a legally sufficient tender can prevent a party from being deemed in default, even if the creditor refuses the offer.

Prerequisites For Making a Valid Tender

Of the lender of money. To make a valid tender the following requisites are necessary:

• It must be made by a person capable of paying, for if it be made by a stranger without the consent of the debtor, it will be insufficient.
• It must be made to the creditor having capacity to receive it, or to his authorized agent.
• The whole sum due must be offered, in the lawful coin of the United States, or foreign coin made current by law and the offer must be unqualified by any circumstance whatever.
  • But a tender in bank notes, if not objected to on that account, will be good. But in such case, the amount tendered must be what is due exactly, for a tender of a five dollar note, demanding change, would not be a good tender of four dollars. And a tender was held good when made by a check contained in a letter, requesting a receipt in return which the plaintiff sent back demanding a larger sum, without objecting to the nature of the tender. When stock is to be tendered, everything must be done by the debtor to enable him to transfer it, but it is not absolutely requisite that it should be transferred.
• If a term had been stipulated in favor of a creditor, it must be expired; the offer should be made at the time agreed upon for the performance of the contract if made afterwards, it only goes in mitigation of damages, provided it be made before suit brought. The tender ought to be made before day-light is entirely gone.
• The condition on which the debt was contracted must be fulfilled.
• The tender must be made at the place agreed upon for the payment, or, if there be no place appointed for that purpose, then to the creditor or his authorized agent.

Legal Consequences of a Valid or Invalid Tender

The effect of a tender depends on whether it meets all legal requirements:

• Valid Tender: If a debtor properly tenders payment or performance and the creditor refuses, the debtor is generally released from liability for further interest, penalties, or breach claims.
• Invalid Tender: If the tender fails to meet timing, amount, or form requirements, it will not protect the debtor and may result in continued liability.
• Mitigation of Damages: Even if a late tender is not fully protective, courts may use it to reduce damages if the debtor shows good-faith efforts to perform.

A properly documented tender, such as a written notice with proof of payment availability or delivery attempt, often strengthens a party’s position in litigation.

Properly Made Tenders

When a tender has been properly made, it is a complete defense to the action but the benefit of a tender is lost, if the creditor afterwards demand the thing due from the debtor, and the latter refuse to pay it.

Tender in Contract Disputes and Litigation

Tender often arises in breach of contract or debt recovery actions:

• Complete Defense: A debtor can assert a valid tender as a full defense if sued for nonpayment or nonperformance.
• Court Considerations: Judges may review the timing, form, and communication of the tender to determine its legal sufficiency.
• Interest and Costs: Once a valid tender is refused, the creditor typically cannot recover interest or legal costs accruing after the refusal.

In practice, parties often accompany tender with documentation—such as receipts, certified checks, or delivery confirmations—to establish the defense in court.

Specific Articles

Of the tender of specific articles. It is a rule that specific articles maybe tendered at some particular place, and not, like money, to the person of the creditor wherever found. When no place is expressly mentioned in the contract, the place of delivery is to be ascertained by the intent of the parties, to be collected from the nature of the case and its circumstances. If, for example, the contract is for delivery of goods from the seller to the buyer on demand, the former being the manufacturer of the goods or a dealer in them, no place being particularly named, the manufactory or store of the seller will be considered as the place intended, and a tender there will be sufficient. When the specific articles are at another place at the time of sale, which will be the place of delivery.

When the goods are cumbrous, and the place of delivery is not designated, nor to be inferred from the circumstances, it is presumed that it was intended that they should be delivered at any place which the creditor might reasonably appoint; if the creditor refuses, or names an unreasonable place, the debtor may select a proper place, and having given notice to the creditor, deliver the goods there.

Practical Considerations for Tender of Goods and Payments

When tender involves goods or payments, the following considerations help ensure effectiveness:

• Delivery Location: Specific articles are generally tendered at the seller’s place of business unless otherwise agreed.
• Reasonable Hours: Tender should occur during normal business hours and before daylight ends unless the contract specifies otherwise.
• Notice to Creditor: Providing notice and reasonable opportunity to accept the tender can avoid disputes.
• Preservation of Articles: Goods must be in a condition that fulfills the contract at the time of tender.

In modern commerce, electronic funds transfer or certified checks are often used for monetary tenders, while shipping receipts and inventory confirmations support goods tenders.

Frequently Asked Questions

1. What is the legal definition of tender?
   Tender is a formal offer to perform a contractual obligation, such as paying money or delivering goods, that satisfies the terms of an agreement.
2. What makes a tender legally valid?
   A valid tender must offer the full obligation, be timely, meet all contractual conditions, and be made to the appropriate party in lawful form.
3. Can a tender protect me from legal action?
   Yes. A properly made tender can serve as a complete defense against claims of nonpayment or breach if the creditor refuses it without valid reason.
4. What happens if a tender is refused?
   If a valid tender is refused, the debtor is typically relieved of further interest or damages. If the tender was invalid, liability may continue.
5. How does tender apply in modern business?
   Tender applies in contract settlements, government bids, and corporate transactions, including tender offers for stock buybacks.

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