Tender of Performance
Generally, a contractual obligation must be performed without performance being demanded. A debtor must seek out his creditor, if necessary, in order to pay. This position may be varied by the terms of the contract, custom, or statute.
If one party offers to perform or unsuccessfully attempts but is unable to do so, there is a tender of performance.
Where one party cannot complete his obligations without the co-operation of the other, a tender of performance and rejection may suffice. In this case, he has done all that can be reasonably expected of him.
In contrast, where the obligation is one of performance rather than of the payment of money, the tender of performance may suffice to discharge the obligation.
Demand Sometimes Required
In some cases, it is specified, presumed or implied by law that the party’s obligations do not fall due unless and until demanded. This is so even if there is a breach of contract. This position can be readily varied by the express or implied agreement of the parties.
A deposit account must usually be demanded before the bank’s obligation to pay becomes due. Most loans do not automatically fall due on breach of contract. However, the position is ultimately determined by the party’s contract. The issue is of practical significance in the context of the Statute of Limitations.
In other cases, the position is implied by statute or common law. For example, a bill of exchange must be presented for payment. In the context of landlord and tenant law, remedies may not be exercised in several contexts, until certain demands have been made and are unsatisfied. In these cases, the position is less readily changed by the party’s express or implied agreement.
The method of payment may be expressly or impliedly designated by the contract. There may be an option as to the method of payment. It is presumed that the option as to payment is that of the payer/obligor.
A debtor must comply with his requisite obligations in respect of the place, time and manner of payment. If cash is required, then cash must be paid.
A tender of money requires the production of cash or cash equivalent. The production of a banknote or sum, which is so large as to require extensive change, may not be sufficient. The tender must be at a reasonable hour.
The legal tender of the State is the Euro. Under the Economic and Monetary Union Act a person is not obliged to accept more than 50 coins denominated in Euro or in cents in any single transaction.
In the case of a tender of money, the debt is not discharged. Money may be paid into court in satisfaction of the claim if the creditor refuses to accept it. In contrast, where the obligation is one of performance rather than of the payment of money, the tender of performance may suffice to discharge the obligation.
Payment Other than in Cash
A payment by cheque or other negotiable instrument is a conditional payment only. Payment is not complete until the instrument is honoured. The debt is not discharged unless the cheque or equivalent payment mechanism clears.
It appears that while the presentation is ongoing, the creditor impliedly undertakes not to sue for payment of the debt. If payment is made by way of cheque or other payment mechanism and is dishonoured, the creditor can sue on the original debt or on the cheque or other instrument.
Payment by charge card or credit card is usually an absolute discharge. The issuing company discharges the seller/supplier. The buyer must pay the card issuer under the terms of their underlying contract, but this is an independent commitment.
In the case of debit cards or credit cards, the discharge is immediate. If the card issuer fails to pay, the supplier’s remedy is against the issuer.
It is a question of interpretation as to whether performance on time is a strict condition of the contract. If it is a strict condition, then if the obligation is not performed by the relevant party by the stated day, the other party is entitled to terminate his further obligations and sue for damages. The contract is breached in a fundamental way and the “innocent” party has the usual remedies.
The Sale of Goods Act makes specific provision in respect of the time of performance. The Act provides that when goods are to be delivered, but no time for delivery is fixed, they must be sent within a reasonable time. If goods are tendered at a reasonable hour, non-acceptance may amount to a repudiation, which entitles the seller to treat the contract as discharged. Demand or tender is ineffective unless it is made at a reasonable hour. What is reasonable, depends on the circumstances.
Unless a different intention appears in the contract, terms as to payment are not “time of the essence”. Time of the essence means that if the obligation is not performed at the due time, the other party may treat his obligations as totally discharged and claim damages for breach of contract.
Making Time Fundamental
It is presumed that terms as to time are not “of the essence”, that is that they are not strict, essential or critical. It is possible to provide in a contract that time is of the essence. This must be clearly stated.
If the contract does not make time of the essence, then it presumed that once the performance of one party’s obligation is late, the innocent party may make time of the essence by giving reasonable notice to the other. He must specify a further reasonable time within which the obligation is to be performed.
If the obligation is not performed by the original date specified, the other party may make time strict, by giving notice of a further reasonable time in which the obligation must be performed. For example, if the date for delivery is missed, the buyer may give a further reasonable period, after which he may terminate the contract if the seller does not perform. The buyer is then fully discharged and may sue for damages for his loss.
In the case of some types of contract such as options, the courts will tend to interpret the obligations as to time as strict.
Delegation and Subcontracting
It is a matter of interpretation of the contract in the circumstances, as to whether it must be performed by a party to the contract, or whether performance may be subcontracted to another.
Vicarious performance of many contracts may be undertaken by sub-contractors or employees. The party who has sub-contracted his obligations remains fully liable to the other party to the contract, in accordance with his contractual obligations.
The rights, requirements or options as to sub-contracting may be determined by the express or implied terms of the contract. It may expressly allow performance through subcontractors.
Exceptionally, the party’s obligations may be expressly limited to an obligation to exercise reasonable care in the selection of the sub-contractor. Such an obligation May be inferred, even where it does not limit the selecting party’s obligations to the other.
Delegation / Vicarious Performance Prohibited
Vicarious performance is generally permissible, provided that the other party is not prejudiced. Where the other party relies on the party’s personal skill, ability and reputation, vicarious performance is unlikely to be allowed. This will be readily presumed in circumstances where it is clear that one party’s personal skill judgement and experience has been sought out and relied on by the other.
Delegation is not generally permitted in the case of personal services, which require personal skill, care, and attention. In such cases, the other party usually reposes confidence and skill in the other party.
Even if vicarious performance is not permitted, personal performance may be waived in accordance with general principles, by the other party
Assignment of Obligations Not Permitted
The obligation to perform may not be assigned. A party may not hive off his contractual obligations. To allow otherwise would be to fundamentally undermine the law of contract.
In principle, a party may be entitled to require novation of a substituted party. Very clear language, conferring such an option would be required. Such a term would have to avoid the risk that the apparent obligation might be characterised as illusory consideration.
Disablement / Incapacitation
Where one party disables himself from performance, he may commit a fundamental breach. It may be an anticipatory breach. Whether he has disabled himself and committed a repudiatory breach will depend on the circumstances. If the thing is not unique or if he can reacquire, there is unlikely to be a breach.
A person is not necessarily disabled or incapacitated from performing a contract, merely because he has become insolvent. This may be so in some circumstances. However, in many circumstances, the contract may be such as may be performed by the Official Assignee or trustee in bankruptcy.
References and Sources
Irish Textbooks and Casebooks
Clark, R. Contract Law in Ireland 8th Ed. (2016) Ch 18
Friel, R. The Law of Contract 2nd Ed, (2000)
McDermott, P. Contract Law (2001) 2nd Ed (2017) Ch 21
Enright, M. Principles of Irish Contract Law (2007)
Clark and Clarke Contract Cases and Materials 4th Ed (2008)
English Textbooks and Casebooks
Poole, J. Casebook on contract law. (2014) 12th edition
Stone and Devenney, The Modern Law of Contract 10th Ed (2015)
McKendrick, Contract Law 10th Ed (2013)
Chen-Wishart, Contract Law 5th Ed (2015)
Anson, Reynell, Beatson, J., Burrows, Cartwright, Anson’s law of contract. 29th Ed (2010)
Atiyah and Smith, Atiyah’s introduction to the law of contract. 6th Ed.
Chen-Wishart, M. (2015) Contract law. 5th Ed.
Cheshire, Fifoot and Furmstons, Furmstons and Fifoot Cheshire, Fifoot and Furmston’s law of contract. OUP.
Duxbury, Robert (2011) Contract law. 2nd Ed.
Halson, Roger (2012) Contract law. 2nd Ed.
Koffman & Macdonald’s Law of Contract. 8th Ed. (2014)
O’Sullivan, Hilliard, The law of contract. 6th Ed. (2014)
Peel, and Treitel, The law of contract. 13th Ed. (2011).
Poole, J.Casebook on contract law. 12th Ed. (2014).
Poole, J. Textbook on contract law. 12th Ed. (2014)
Richards, P Law of contract. 10th Ed. (2011)
Stone, R. The Modern law of Contract. 10th Ed. (2013)
Treitel, G. H. An outline of the law of contract. 6th Ed (2014).
Turner, C Unlocking contract law. 4th Ed. (2014).
Upex, R. V., Bennett, G Chuah, J, Davies, F. R. Davies on contract. 10th Ed. (2008).
Stone,Devenney, Text, Cases and Materials on Contract Law 3rd Ed (2014)
McKendrick, Contract Law Text, Cases and Materials 6th Ed (2014)
Stone, R, Devenney, J Cunnington, R Text, cases and materials on contract law. 3rd Ed (2014)
Burrows, A. S. A Casebook on Contract. 4th Ed.
Beale, H. G., Bishop, W. D. and Furmston, M. P. Contract: cases and materials. 5th ed. (2008)
Blackstone’s Statutes on Contract, Tort & Restitution 2017 (Blackstone’s Statute Series)
UK Practitioners Texts
Chitty on Contracts 32nd Edition, 2 Volumes & Supplement (2016)
The above are not necessarily the latest edition.