Opinion ID: 485541
Heading Depth: 2
Heading Rank: 4

Heading: Effectiveness of Tender

Text: 27 Papo next argues that Olga's made a legally sufficient tender to trigger exercise of an option to purchase. Papo contends that Olga's was required to tender to Papo in cash before the May 31, 1983 deadline Olga's suggested fair market value of $34,147.00 for the equipment before the option could be exercised. 28 The option in this case was to be exercised by Olga's paying fair market value for the equipment rather than a specified amount. Thus the term was left open for reasonable negotiation as to fair market value in the event Olga's chose to exercise the option. Plaintiff indicated a clear and timely intent to exercise the option. In response Papo directed that Olga submit a fair market value for the leased equipment. Prior to expiration of the lease, in accordance with Papo's direction, Olga set what it deemed to be fair market value of the equipment and improvements in the Hayward store at $34,147.00 and indicated that it was ready and able to close these purchases. After the lease had expired, stating that the sum offered was not commensurate with the current market value of the leased equipment, Papo rejected the option proposal, but did not set out its version of fair market value before expiration. Thus Papo effectively prevented Olga's from tendering an acceptable amount without making a counteroffer. 29 Tender of cash is not always a condition precedent to an effective exercise of an option. Michigan courts have on several occasions found that a failure to tender cash was not fatal to actions for specific performance or contract damages: The law of tender is replete with cases which depart from the generalization that tender is the payment in hand of legal currency to explore the fact-laden paths of the litigants' course of dealing. Birznieks v. Cooper, 405 Mich. 319, 328, 275 N.W.2d 221, 224 (1979). Tender requires the offer of that to which the tenderee is entitled, without qualification or condition, an actual offer to pay coupled with present ability. Duiven v. Brakesman, 356 Mich. 1, 3, 95 N.W.2d 868, 869 (1959). Another court has added: 30 when the default has not been serious and the vendee is willing and able to continue with his performance of the contract, the vendor suffers no damage by allowing the vendee to do so. In this situation, if there has been substantial part performance or if the vendee has made substantial improvements in reliance on his contract, permitting the vendor to terminate the vendee's rights under the contract and keep the installments that have been paid can result only in the harshest sort of forfeitures. Accordingly, relief will be granted whether or not time has been made of the essence. [Barkis v. Scott 34 Cal.2d 116, 208 P.2d 367, 371 (1949) ]. 31 6 Williston on Contracts, Sec. 834 at 113-14. Williston, in his treatise, explored at greater length when formal tender is not mandated in actions at law, by quoting from Cladianos v. Friedhoff, 69 Nev. 41, 240 P.2d 208, 210 (1952): 32 The word 'tender' as used in such connection does not mean the same kind of offer as when it is used in reference to the payment or offer to pay an ordinary debt due in money, where the money is offered to a creditor who is entitled to receive it, nothing further remains to be done, and the transaction is completed and ended; but it means only a readiness and willingness accompanied with an ability on the part of one of the parties to do the acts which the agreement requires him to perform, provided the other will concurrently do the things which he is required by it to do, and a notice by the former to the latter of such readiness. Such readiness, ability, and notice are sufficient evidence of, and indeed imply, an offer or tender in the sense in which those terms are used in reference to mutual and concurrent agreements. It is not an absolute, unconditional offer to do or transfer anything at all events, but it is, in its nature, conditional only, and dependent on, and to be performed only in case of, the readiness of the other party to perform his part of the agreement. 33 The law is clear, however, that any affirmative tender of performance is excused when performance has in effect been prevented by the other party to the contract.... It is a principle of fundamental justice that if a promisor is himself the cause of the failure of performance, either of an obligation due him or of a condition upon which his own liability depends, he cannot take advantage of the failure. 34 In this respect it is stated that the term 'prevented from performing' does not mean 'that there must be physical prevention, but that any acts, conduct, or declarations of the party, evincing a clear intention to repudiate the contract, and to treat it as no longer binding, is a legal prevention of performance by the other party. 35  '... a refusal on the part of the defendant to perform obviated the necessity of performance, or tender of performance, on the part of the plaintiff, after such refusal.'  36 6 Williston, Williston on Contracts, Sec. 832 at 101-03 (W. Jaeger ed. 3d ed. 1962) (footnotes omitted). 37 Although the quoted passage refers to actions for damages at law, Williston stated the rule is essentially the same for actions for specific performance in equity. Id., Sec. 834 at 109-13. Furthermore, under a court's equitable power, serious consideration must be given to determine whether a strict rule of tender would cause a forfeiture. 38 A party does not forfeit his rights to the interposition of a court of equity to enforce a specific performance of a contract, if he seasonably and in good faith offers to comply, and continues ready to comply, with its stipulations on his part, although he may err in estimating the extent of his obligation. [Willard v. Tayloe, 75 U.S. (8 Wall.) 557, 569 (1868).] 39 Id. at 113-14 (footnotes omitted). 40 Plaintiff's evidence that it was ready and willing in good faith to exercise the option to purchase in accordance with the agreement's terms adequately satisfied the tender requirement, Papo prevented Olga's from timely tendering an acceptable sum. Because of these circumstances, harsh forfeiture would result if actual tender were mandated, and we find no error in the trial court's refusal to reach such a result. Papo indicated that the issue of fair market value was open to negotiation and did not suggest that any particular sum by Olga's would be accepted. 6