MEANING AND DEFINITION

The Doctrine of Tender refers to the legal principle where a promisor offers to perform their contractual obligations to the promisee. This offer, known as a ‘tender,’ signifies the promisor’s readiness and willingness to fulfill their part of the contract. If the promisee refuses to accept this performance, the promisor is typically discharged from their obligations under the contract.

In Indian Contract Law, this concept is encapsulated in Section 38 of the Indian Contract Act, 1872. This section states that when 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. 

ESSENTIALS OF A VALID TENDER

For a tender to be considered valid under Indian law, it must meet certain criteria:

1. Unconditional Offer: The tender must be made without any conditions attached. The promisor should offer to perform exactly what was agreed upon in the contract without seeking any modifications or imposing new terms.

   • For instance, in the case of Karsales (Harrow) Ltd v. Wallis, the court held that any deviation from the agreed terms, such as adding conditions, would render the tender invalid.

2. Proper Time and Place: The tender should be made at the time and place specified in the contract. If the contract does not specify these details, the tender must be made at a reasonable time and place.

   • This ensures that the promisee has a fair opportunity to accept the performance. As noted in Ramana Dayaram Shetty v. International Airport Authority of India, adherence to stipulated conditions, including time and place, is crucial in contractual obligations.

3. Whole Obligation: The tender must cover the entire obligation as specified in the contract. Partial performance or offering less than what was agreed upon does not constitute a valid tender. The promisor must be ready to fulfill the contract in its entirety.

4. Proper Form: The tender must be in the form required by the contract.

   • For example, if the contract specifies payment in a particular currency or delivery of goods in a specific manner, the tender must comply with these specifications.
   • Offering a cheque instead of cash when cash payment is stipulated would not be a valid tender.

5. Capability and Willingness: The promisor must demonstrate both the ability and the willingness to perform the contractual obligations.

   • Mere intention is insufficient; there must be a clear and present ability to perform as well.

LEGAL PROVISIONS AND PROCEDURES

Section 38 of the Indian Contract Act, 1872, outlines the effect of refusal to accept an offer of performance.

• It 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.
• This provision protects the promisor from liability when the promisee unjustifiably refuses to accept the performance. 

Additionally, Section 46 of the Act deals with the time for performance of a promise where no application is to be made and no time is specified. It mandates that the performance must be completed within a reasonable time.

• What constitutes a ‘reasonable time’ is determined based on the specifics of each case.

CASE LAWS AND PRECEDENTS

1. Ramana Dayaram Shetty v. International Airport Authority of India (1979)

   • In this landmark case, the Supreme Court of India emphasized the importance of adhering to the terms and conditions specified in a tender.
   • The court held that accepting a tender that does not conform to the stipulated conditions is arbitrary and violates Article 14 of the Constitution.
   • This case underscores the necessity for both parties to strictly follow the agreed-upon terms in contractual obligations.

2. Tata Cellular v. Union of India (1994)

   • This case highlighted the principle of judicial restraint in matters of contractual obligations and tenders.
   • The Supreme Court observed that while the decision-making process in awarding contracts can be reviewed, the courts should refrain from substituting their judgment for that of the competent authority.
   • This case reinforces the sanctity of the tender process and the limited scope of judicial intervention.

DOCTRINES AND PRINCIPLES

• Doctrine of Substantial Performance:

  • This doctrine applies when a party has performed the essential obligations of a contract, albeit with minor deviations.
  • If the deviations do not significantly affect the contract’s outcome, the performing party may still be entitled to payment, subject to deductions for the deficiencies.

• Principle of Reasonableness:

  • Embedded in Section 46 of the Indian Contract Act, this principle mandates that in the absence of a specified time for performance, the obligations must be fulfilled within a reasonable time.
  • What constitutes a reasonable time is contextual and depends on the nature of the contract and the circumstances surrounding it.

EXCEPTIONS AND DEFENSES

While the Doctrine of Tender provides a framework for the discharge of contractual obligations, certain exceptions and defenses may arise:

1. Refusal Due to Legitimate Reasons:

   • If the promisee refuses the tender due to legitimate reasons, such as the promisor’s inability to perform the contract as agreed, the promisor may not be discharged from liability.

2. Conditional Tenders:

   • A tender that imposes conditions not stipulated in the original contract can be rightfully refused by the promisee.
   • Such a tender does not constitute a valid offer of performance.

3. Partial Performance:

   • Offering to perform only a part of the contractual obligation does not amount to a valid tender.
   • The promisee is entitled to reject such an offer.