The perfect tender rule is the right of the buyer to reject the goods if the seller fails to conform to its demands and orders. This article examines the meaning of the “Perfect Tender Rule” and outlines the exceptions to this rule. You will learn about your rights as a buyer if an improper tender is delivered to you and ways to avoid rejection under this rule if you are a seller.
What is a Perfect Tender Rule?
Under Article 2 of UCC (Uniform Commercial Code), a buyer can reject the delivery of goods from the seller if the tender of goods is not ‘perfect’ in one or another way. The perfect tender rule is the authority of the buyer to demand a ‘perfect tender’ of goods and the right to reject it upon the failure of the seller to conform to the contract.
Exceptions to the Rule
Exceptions to the rule have been provided under the UCC, as it is not practical on the seller’s part to provide perfect tender of goods every single time.
- Parties can mutually decide the exceptions in the contract itself.
- If the performance period of the seller hasn’t expired- In this scenario, the seller still has time to correct the discrepancies in the tender and make it perfect as per the buyer’s demands before the performance period expires. Sensible sellers can make use of this exception by mentioning the delivery date in the contract and delivering goods before that date. After his inspection, if the buyer finds any non-conformity in the tender, the seller still has time to cure it and deliver the goods before the delivery date mentioned in the contract.
- If the sale has been made under an instalment contract- In this situation, the buyer doesn’t have any right to reject the instalment of goods delivered to him by the seller and, the perfect tender rule doesn’t apply. This exception is based on the following assumptions:
- The non-conformity of an instalment doesn’t harm the value of that instalment to a great extent.
- The seller can cure the defaults in the instalments.
- There is no default in the required documents.
- The supplier provides sufficient assurance of cure.
- If there is a previously agreed manner of delivery, but it turns unserviceable and an equitable substitute is accessible, the seller must resort to the substitute. It will be considered a sufficient tender under the UCC and the buyer will not have any right to reject it, stating the non-conformity of the contract.
- The rule of perfect tender no longer applies to the occurrence of an unanticipated event such as the destruction of goods or amendment of the applicable law.
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